We are all pretty clear on what is meant by wealth. When we think of wealth the first few things that tend to come to mind first are money, net worth, or societal status. In this section we want to suggest that when we think about wealth in the context of family owned businesses, it’s possible to ‘develop’ many different kinds of wealth.
Hmmmm…..’developing’ a family’s wealth intentionally. What a concept – see what you think.
- Family wealth is developed when the family, through regular communication generates respect and trust.
- Financial wealth is what the family must do to sustain its monetary wealth often by creating clear, and realistic expectations among heirs.
- Human wealth is developed when families build self-esteem and identity independent of having money.
- Societal wealth is created when the family expresses their values in the community through action such as involving all family members in service and philanthropy.
- Spiritual wealth is put into place when a family understands the deeper meaning and purpose of wealth in their lives.
- Structural wealth develops from a combination of a written family constitution, regular meetings of family councils, accountability and clear communication to beneficiaries.
You can probably see the value of developing a more diverse ‘lens’ concerning wealth – value to the family in working together and value to the business because a stable, cohesive family is the business’ foundation.
Another thing to think about is how we may want to ‘spend’ our wealth. The two broad categories in which most of us will cluster are ‘Personal Proprietorship’ and ‘Stewardship’.
It’s important that family heirs understand their own point of view as they look forward to their inheritance.
Personal proprietors feel fortunate to have the wealth that has been given to them or inherited by them, but don’t feel obligated to preserve it for future generations; they primarily use the wealth to benefit their current quality of life.
Stewards of wealth is an attitude in favor of legacy, responsibility, risk aversion, spending disciplines and education of the next generation; wanting the family to benefit from this wealth even long after the existence of the family business.
Although there is no right or wrong answer, you can see how each preference would begin to drive some of the other decisions regarding stewardship of the family legacy.
Have you heard the term estate and wondered exactly what it is? Or how it applies to you? This segment helps lay the foundation of estate planning and how it applies to you as a business owner or a member of a family business.
Have you thought about the wealth you are transitioning to your children? How they might deal with this transfer? This segment explains what wealth means and some attitudes heirs may have in relation to preserving the wealth.
Have you begun your estate planning? Do you even know where to begin? This online quiz is a mix of standard estate planning terms. We cover what is and what may be a common misperception. This quiz is intended to get you thinking about estate planning and your own process.
Family Wealth capital is developed when the family generates respect and trust by regular communication Financial Wealth capital is what the family must do to sustain its monetary wealth often by creating clear and realistic expectations among heirs Spiritual Wealth capital is put into place when a family understands the deeper meaning and purpose of wealth in their lives Structural Wealth capital develops […]