Building Bridges with the Next Generation: The Role of Trustees in Wealth Transfer 

The concept of the ‘next-gen’ has become increasingly significant in view of the great wealth transfer which is set to see trillions pass down through families over the next few decades. For trustees, this momentous shift presents both challenges and opportunities.  

As we witness this transition of wealth across generations, this role of the trustee must evolve to accommodate the changing needs, expectations, and attitudes of the younger generation. Building early relationships with these future beneficiaries is crucial. However, this must be done delicately to ensure that the trustee supports the family’s overall goals without undermining the authority or wishes of the older generations – the patriarchs and matriarchs who establish the family’s wealth.  

Strengthening Connections with the Younger Generation  

In any family, especially one undergoing a significant transfer of wealth, tensions can arise. A trustee can play a pivotal role in mitigating these potential challenges by building strong, meaningful connections with the younger generations as well. But how can a trustee build such relationships without overstepping boundaries?    

One effective strategy is to approach the younger family members with the same respect and consideration afforded to the older generations. By acknowledging and reinforcing the authority of the patriarch or matriarch, trustees can gradually introduce themselves as trusted advisors rather than disruptors. Transparency, trust, and open communication are key. This could mean involving the younger family members in discussions about their future financial responsibilities without diminishing the influence of the older generation.  

It is crucial to understanding that the younger generation may be apprehensive about wealth management, feeling either overwhelmed by the responsibilities or unprepared to handle the significant financial decisions ahead. In these instances, trustees should position themselves as educators and guides, supporting the family in creating an intergenerational dialogue that encourages understanding and continuity. Perversely, the younger generation may already have very strong views on what they believe should be the future financial strategy and this may not always align with the strategy that has been driven by the older generation of the family. In these scenarios, the trustee must balance all views carefully and endeavour to mediate a position that allows everyone to feel their views are taken into account. 

Educating the Next-Gen on Wealth Structures  

Another vital role of the trustee is to educate the next generation on the intricacies of wealth management structures, such as trusts, foundations, or family charters. Younger family members might not immediately grasp the rationale behind such frameworks, viewing them as overly complex or unnecessary. This is where the trustee's guidance can be invaluable.  

Rather than overwhelming the ‘next-gen’ with financial jargon, trustees should offer clear, digestible explanations on how these structures protect, preserve, and grow family wealth. They can explain how family charters, for example, help formalise the family's core values and long-term objectives, while simultaneously outlining roles, responsibilities, and guidelines for managing future wealth transitions.  

In doing so, trustees not only demystify these processes but also help younger generations appreciate the importance of careful wealth management. This education should be tailored to the unique needs and levels of experience of each family member, ensuring that no one is left behind as wealth moves into their hands.  

The Role of the Family Charter  

A family charter is a vital tool in managing potential conflicts as wealth transitions from one generation to the next. It acts as a framework that sets out the family's values, vision, and principles for managing wealth and succession. But should the younger generation be involved in drafting this framework?  

This is a delicate question. On the one hand, it is essential that the family charter reflects the wishes of those who have generated the wealth. Their insight into how the family’s fortune was built and how they wish it to be preserved is invaluable. However, involving the younger generation in these discussions can be equally important, as they will ultimately be responsible for upholding the charter in the future.  

The answer lies in balance. Trustees can act as mediators, ensuring that the perspectives of both the wealth creators and the inheritors are considered. By engaging the ‘next-gen’ in the drafting process - whether through direct input or as part of advisory discussions - trustees can help prevent misunderstandings or disputes later on. Simultaneously, they can protect the legacy and intentions of the older generations, ensuring that the family’s wealth and values are preserved across time.  

Navigating the Future of Wealth Transfer  

Looking ahead, trustees must adapt to the changing expectations and preferences of the next generation. The younger generation tends to prioritise different investment avenues such as ESG (Environmental, Social, and Governance) criteria, cryptocurrencies, and entrepreneurial ventures. As such, trustees should ensure they are equipped with the knowledge and expertise to advise on these trends.  

Ultimately, trustees who embrace their role as educators, mediators, and trusted advisors will find themselves better positioned to navigate the complexities of wealth transfer. By building strong relationships early, understanding the values of the entire family, and adapting to the evolving priorities of the ‘next-gen’, trustees can ensure they remain at the forefront of the wealth management landscape in the years to come.  

Navigating intergenerational wealth transfer is as much about people as it is about planning. If you're looking to strengthen family connections and prepare the next generation with confidence and care, our experienced trustees are here to support you. 

Speak with Vicky Stables to explore how we can help build lasting bridges across generations. 

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations, and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.     

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