Second, families with financial wealth, particularly in America, create a plethora of complex structures, including trusts, family limited partnerships, LLCs, LLPs, family corporations and family philanthropies. Traditionally, there have been no programs to teach subsequent generations the skills and practices to manage these structures and relationships. As a result, structures that are created by excellent consultants become weakened by subsequent family members who lack the skills necessary to make them work. Instead of being useful, they become entropic energy drainers, because no one knows how to make them work.
But the greater problem that plagues wealthy families is a failure to create an intellectual community within the family that is based on learning, sharing the learning, and then making the learning useful to the whole family. Parents must grow thriving human beings who are intellectually curious creatures, people who are pursuing individual journeys of happiness, so that the management of the financial capital falls to interesting, competent, creative people. So, the greater dysfunction—let us call it entropy—that can bring a family down is the inability to grow great human beings.
In order to cultivate their independence and initiative, second- and third-generation family members should not be informed of their inheritance until they are well established in careers.
I disagree because of the issue of keeping secrets. A family may hold certain information as confidential, recognizing age-specific abilities to handle information. However, I have never seen a case where a family could keep the secret of significant financial capital from their children. But, in trying to do so, huge creative time can be wasted as the children spend their time trying to discover the "secret." This process results in time wasted in the family’s development. In the end, the discovery of the secret is a huge drain on the family’s human and intellectual capital.
Secondly, the career and opportunity development of the younger members of the family is best when they are encouraged to explore as many possibilities for work as they can. And I mean work with a capital W—Work as a calling. If we indicate that we have no resources to permit a child to become a world-class ski racer or an excellent violinist, everybody is lying to everybody. Instead of the family being a bank with assets that are available to be lent or granted to grow a family’s human and intellectual capital, those assets are hidden away and not made useful.
At the end of the movie, Hello Dolly, Dolly Levy is trying to decide whether to marry Mr. Vandergelder. She keeps asking her deceased husband to send a sign as to whether she should marry her suitor. Finally, Mr. Vandergelder said, "You know, Dolly, money is like fertilizer. It’s only good if it’s spread around." And Dolly says, "Oh, good. That’s what Mr. Levy said, so I can marry you." I paraphrased it, but the point is that all the great families I have studied operate without keeping their wealth a secret from their children. They operate on
the principal that capital should be available to grow and meet the interests
of the next generations. And they do quite well.
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