Among families, money often acts as a magnifier – amplifying opportunities but also intensifying certain challenges.

Stacy Allred, Managing Director, Head of Family Engagement and Governance at J.P. Morgan Wealth Management, offers a framework for passing along family financial wealth in a way that protects your legacy, aligns with your values and empowers future generations.

Practice 1: Align financial gifts to grow the human, intellectual, legacy and social capital of your family

As you strategize about the long-term impact of financial success, you might ask yourself an obvious but essential question – what exactly does “wealth” mean to you?

Perhaps you weigh financial wealth by what it can provide you with in practice, like security, time, flexibility or comfort. But a broader perspective may be to conceive of economic abundance as a tool – how you wield it is up to you, and you can make intentional decisions aimed at shaping brighter future outcomes for yourself, your family and your community

James (Jay) E. Hughes Jr., author and seminal voice in the family wealth field, suggests a more holistic view of wealth that centers on overall wellbeing. This more expansive perspective requires accounting for other forms of capital beyond financial assets: human capital, legacy capital, intellectual capital and social capital.¹

While your decisions will inevitably hinge on what’s important to you and your family, focusing on developing these types of capital can help you establish your shared family purpose (e.g., legacy capital), values and the outcomes you hope to achieve.

Practice 2: Engage in learning conversations and build conflict resilience to deepen family connection

A key step in establishing a family legacy is determining the “why” of your wealth – answering questions about what your family stands for, what you want to be known for and how you envision your legacy several generations from now. Connection, communication and transparency are critical ingredients in creating a plan for your family’s financial wealth that works for everyone.

However, it isn’t always easy to ensure that everybody is on the same page – especially when it comes to money. A study found that 27% of Americans 18 and older report being estranged from one or more family members, with money and inheritance issues representing one of the common pathways toward family rifts.² Given what’s at stake, families have the opportunity to develop conflict resilience by using transparency in their decision making process,³ having courageous conversations and building cooperation skills. For example, families with young kids can consider adding books to your nighttime reading routine to plants seeds for kids to constructively learn how to work through everyday problems.⁴

Here are four questions that family wealth consultant Ellen Perry suggests to deepen your connection with your loved ones, which can help open the door for fruitful conversations about values and goals:⁵

• What can I do more of that makes you feel close to me?
• What can I do less of that makes you lean out emotionally?
• What do you wish I understood more about who you are or what you value?
• What are your favorite stories from your childhood, and why?

Practice 3: Create culturally and structurally balanced plans

Allred shared the saying that, “The first generation creates wealth, but the second generation creates legacy.” But accomplishing this requires creating a system that all family members can flourish in.  Along with Hughes and Mary Duke, Allred is asking the question: Can your family live in the plan you create?⁶ Realizing that family gift and estate plans create a human experience that can last years, decades or generations, it’s important to broaden the focus beyond protecting assets and saving taxes to create a culturally and structurally balanced plan and design a culture of care to equip all family members to effectively navigate the complexity of wealth.

Practice 4: Embrace lifelong learning for all family members

Actively consider and build the skills and knowledge different members will need to understand and successfully navigate family wealth. 

Allred, along with co-creators Joan DiFuria and Stephen Goldbart, lays out a system called the 10 x 10 Learning Roadmap, offering a framework for how all generations of the family can be actively engaged and growing the skills essential to effectively integrate wealth. The tool provides a roadmap of 10 core competencies that individuals can work to develop over 10 life stages (ages five to 100), helping family members get a sense of the inventory of wealth knowhow based on the phase of life they are in – and how to then select and implement learning activities based on what’s most relevant to fill in those gaps.⁷

Practice 5: Make “gifts with spirit” versus “transfers”

Communication and transparency are especially essential when it’s time to transfer your financial assets. Communication aims for sharing the right amount of information at the right time, starting not with your valuables, but with your values. Over time, through a series of thoughtful conversations, families can move into transparency. In addition to keeping in mind the style and capacity of your beneficiaries, it’s critical to set clear expectations and leave plenty of room for learning (not telling) conversations as you pass along assets.

It’s important to understand the distinction between a gift with spirit and a transfer. Based on ideas in the “Cycle of The Gift,”⁸ one can explore what it means to be an effective giver and an effective receiver; a gift with spirit causes both the giver and the recipient to grow and to feel free – and it spurs recipients to give in turn, perpetuating the cycle of the gift. A gift without spirit is what Hughes, Massenzio and Whitaker call a transfer. 

Making transfers can lead to issues of entitlement, misunderstanding and distrust among family members. If your asset transition plan does involve this type of transaction, it is vital to put in the effort to clearly articulate your expectations and intentions. Don’t leave out the “why” that’s driving your decision, and make sure it is a two-way conversation. 

The bottom line

Forging a system where gifts fuel growth and development and build a lasting legacy for your family is a group effort. By adopting a long-term and holistic view on wealth, deepening your familial relationships, transparently communicating your hopes and expectations and learning about the dreams of each family member, you can open pathways to enrich and empower those who come after you. As in the words of poet Mary Oliver, they determine what they will do with their one wild and precious life.