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Heads of Wealthy Families Hold Off Disclosing Inheritance: Wilmington Trust

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Nearly 30% of family leaders have no plans to share inheritance details out of fear of demotivating heirs, according to a new survey.

The study titled “Navigating the Wealth Transfer Landscape” by Campden Wealth, the Institute for Private Investors, and Wilmington Trust included 57 research participants that belong to families with a net worth of at least $20 million, including 72% with a family net worth in excess of $50 million.

The study finds that there are inheritance concerns among wealth holders and family leaders.

Among wealth holders, 67% are apprehensive about sharing inheritance details, and only 10% provided complete information about the amount of inheritance to their heirs, according to the study.

“It’s natural for leaders of multigenerational families to be protective of the younger generations. They simply want what’s best for their children and grandchildren,” said Tom Rogerson, senior family wealth strategist at Wilmington Trust, in a statement. “Preserving family wealth across generations requires making sure the next generation is ready to receive the money. A strong family culture that promotes education and open communication is vital for success.”

The top reasons why inheritance information is withheld are concerns about demotivating or disempowering heirs (29%) and haven’t decided what assets to leave heirs or how to do it (19%). Wealth holders also fear heirs will rely on wealth that might not materialize (10%).

Despite these concerns by the wealth holders, the study finds that the majorityof inheritors do not significantly change lifestyles after windfall. According to the study, 63% of inheritors in the study plan to continue to work – 45% at their present job, 11% at a reduced level and 7% at a job they want to do. Meanwhile, 4% said they plan to focus full time on philanthropic causes.

The study finds that the reasons for this stem from a sense of obligation to ensure the wealth endures for future generations, as well as how they receive their inheritance. For example, heirs that receive inheritance via trusts versus an outright bequest may need to continue to work, according to the study. 

“Polarity and perception between wealth holders and inheritors is not unfounded when it comes to generational wealth transfer,” said Brien Biondi, president of the Institute for Private Investors, in a statement. “But what is evident from the research is that the intended inheritors desire to preserve family wealth. To achieve that, many plan to continue to work after they receive their inheritance, thereby setting a good example for generations to come.”

The research also found that affluent families place high importance and responsibility on the advisors they choose. Wealth holders and inheritors said that hiring a “trustworthy and responsive advisor” is their top priority (93%). In addition to wanting an advisor they trust, the study finds that wealthy families also want sophisticated expertise—at a reasonable cost.

The next three highest priorities in advisor selection are tax mitigation expertise (82%), competitive fees (75%) and recordkeeping (75%). Wealthy families also value advisors with expertise in trust and estate planning (74%), as well as the ability to assist with family decision making and governance (65%). “Successful families should consider hiring wealth managers who are fiduciaries,” said Bill LaFond, president of Wilmington Trust’s Family Wealth Division, in a statement. “…Hiring the right advisor is key to navigating a family’s unique financial environment to create a financial legacy that can endure for future generations.”

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