In previous columns I introduced a number of topics related to the concepts of heritage planning, and in my last posting dated March 23, I wrote about how to foster healthy family dynamics. In this posting I will focus on the importanance of openly discussing money matters with children (view all eight postings to date on the concept of Heritage Planning on this AdvisorOne home page).
It is critical that children begin to discuss financial matters at an adult-to-adult level with their parents. Developing and establishing a Family Bank is one of the keys to accomplishing this. The process of building a functional multigenerational Family Council that actively mentors subsequent generations and brings them into the leadership fold will promote the long-term success of a multigenerational strategy for fostering family unity and growth.
Failure to openly discuss money matters with children is one of the greatest predictors of family disharmony and affluenza—a dysfunctional relationship with money or the pursuit of money. How many of you have ever witnessed someone receiving an inheritance or winning the lottery, only to be left with nothing soon thereafter?
The cure for this problem is the ongoing implementation of pre-inheritance experiences. The Family Bank is the best vehicle for ensuring that this process is intentionally integrated into a family’s heritage planning.
Each Family Bank is different, and serves the unique needs of the family for which it is created. That said, there are a number of elements and concepts that universally apply. To address the issue I’ll be calling upon the work of Jerry Garrett and John Unice of the Orem, Utah-based Keeler Thomas, Inc. Garrett and Unice are leaders in the field of heritage planning, and they have paved the way in helping to streamline the process of setting up a Family Bank.
According to Garrett and Unice, there are three distinct stages of Family Bank Development:
- Capital Accumulation
- Family Advancement
- Legacy Participation
Each stage has specific goals. During the Capital Accumulation phase, for instance, the goal is to set in place the necessary training, Bank procedures, reporting systems, and Council regulations in preparation for Bank activities. It is also the time for concentrating effort on development and accumulation of Bank assets prior to major disbursements.
The Family Advancement phase is the time and process during and through which the activities of the Bank are turned toward disbursements that are aligned with and/or fulfill the family development objectives that were initially outlined in the family’s Heritage Statement.