3. Legislate to lock-in family cohesion through the generations. Many wealth holders love to daydream about idyllic, future family reunions. It’s a great image—and achievable. Forcing cohesion, however, through trusts, restrictive financial vehicles, or stringent foundation governance usually leads to a backlash in the long run, even if the moves are well intentioned.
Regardless of the structures you put in place, if family members don’t find value in staying together as a family, they’ll at best find ways to separate themselves. Families need to opt into remaining a family and believe that there is value in staying together. This value could be emotional support, access to knowledge and experience, understanding the financial benefits of amassed wealth and sustaining an important legacy, giving back to the community, or the privilege of bettering the world through philanthropy, to name a few.
As an example, a spouse’s fear that her kids would all move away caused a serial entrepreneur to split ownership of his 30 companies across all four of their children. After the entrepreneur’s passing, the siblings lack of experience working together quickly turned to heated conflict. In a bold move, they put all 30 businesses up for sale, with each sibling deciding if, where and with whom they wanted to buy back in. When the dust settled, the entrepreneur’s empire was disassembled, but Mom’s dinner table was full again each Sunday.
Despite our best efforts, heartache is sometimes unavoidable. However, if families knew where to look to recognize some of these hazards, they could alter their approach to avoid heartache in the first place. Our hope is that families use these lessons as a roadmap to successfully avoid common pitfalls while driving toward their highest goals, be it making a lasting social impact, setting up the next generation of leadership within the enterprise—or simply being happy.
Andrew Fay is head of Fidelity Family Office Services.