To address these issues, the institute teaches "The Heritage Process," which is as necessary as financial planning and estate planning to the survival of wealth through future generations, according to Zeeb.
Through this process, which usually takes between six and nine months, family members learn what it takes to be a successful family. They meet to share their stories and values. They learn to communicate effectively and elders work to mentor the youngest generation in how to handle money. Simply willing a child a sum of money or setting up a trust fund for him does not mean he will appreciate it and know how to manage it when he comes of age or inherits it.
As part of the process, a family sets up a family fund, or bank, whose funds in part are used to teach children how to manage money. These can be hard lessons with consequences that the family must agree to accept, but children often learn best from the mistakes they make. One family's lesson involved giving the children a certain amount of money to invest during the year, with the proceeds used to pay for a weeklong family vacation. The first year, the children invested in penny stocks and lost most of the money, so they wound up camping because it's all they could afford. The next year, they put all the money into a savings account and didn't lose any, but still didn't have enough for more than a basic vacation. It took a few years, but the children have learned important lessons, both involving how to invest and family life.
"When [the father] asked the oldest child what he learned, he said, 'Other people in the family are impacted by the decisions I make. You and mom had to go camping, too,'" Zeeb says in retelling the story. "It's OK for [children] to make mistakes in small, controlled amounts. But that's challenging for us as parents to allow."
In another case, the elders in the family gave their children money each year to donate to charity. They brought their grant requests to the family committee-parents and grandparents-for approval. When they started, the children were ages 8 and 10. Within a couple of years, they were doing detailed research and had developed very sophisticated reasoning. One child told the committee he had nixed his previously preferred charity because, as Zeeb relates it, "they keep way more than they give to people; they are supposed to give that money away." Instead, he chose an organization that used most or all of the donations it gets for its cause, providing a greater benefit to those in need.
"It's amazing what children will do when you give them a challenge," Zeeb says.
In order to really succeed, the process has to be about more than money, he says. The family history is a key part of the process. Heritage staff spends hours talking to elders to hear their stories and put the information into a family history book. Keeping this updated with new stories and life lessons is key. Zeeb says he worked with one family in which the eldest members came to Oregon via the Oregon Trail. When he asked the youngest children what they wanted to learn from the process, they said they wanted to find out about their great grandparents' experiences travelling on the trail.
"To get those stories down in a format that is going to last, even if that's all a family does, it has value," Zeeb says.
One generation often doesn't realize what the other values.
The Allianz American Legacy Study conducted in 2005 found that 39% of elders believed it was very important for them to pass on a financial inheritance to their children, but only 10% of the heirs judged receiving money or real estate from their parents to be very important. By contrast, 77% of the children, all part of the baby boom generation, said receiving their parents' values and life lessons was very important to them.