Although most family patriarchs have wills and many work with financial advisors or family offices on estate plans, most families don’t develop a strategic plan for future generations. Consider this statistic: 70% of wealth transfers fail after one generation, and 97% fail after three. That nest egg you built over your life, no matter how big or small, disappears shortly after you do. Historically, 86% of families consider leaving values and life lessons an inheritance more important. Unfortunately, financial advisors rarely address non-financial legacy. For those who have a plan, 90% believe it doesn’t deal with their goals, wants, and objectives. But is a strategic plan essential, how do you create one, and who do you turn to for advice?
What Is at Risk Without a Family Strategy?
First consider what it means to FAIL in your financial and non-financial legacy. Your wealth is gone after the next generation leaving no monetary security for future offspring. Because this next generation is typically regarded as “lottery winners,” not knowing how to handle the windfall, they end up broke. Ironically, lottery winners and wealth transfer both have a 70% failure rate. The ineffectiveness of the legacy transfer is attributed to the family culture which lacks communication, purpose and direction. Disharmony and resentment unfold, breaking the family bonds or even leading to estrangement. The intangible assets are slowly forgotten or lost. No longer passed down to future generations are the stories of perseverance, integrity or other core values. Establishing a comprehensive plan might not avoid all of the pitfalls, but not having one eliminates success most of the time. Although it sounds bleak, lets look at a less severe scenario of a family without a plan who’s estate slowly declined, but became revitalized when a plan was established.
Belle-Hampton: A Legacy Renewed Through Planning
Gov. J. Hoge Tyler, a successful politician and entrepreneur, once owned Belle-Hampton. The farm survived the Civil War but was stripped of its resources. Tyler restored the farm his grandfather, General James Hoge, had left him. Because his coal mines, rich farmland, and cattle made Tyler wealthy, he expanded Belle-Hampton to its former grandeur. He held strong ethical and religious convictions and remained loyal to his family and state. After the death of his youngest daughter, Nellie, Tyler moved his family to Radford, VA, leaving the farm without a permanent inhabitant. His son Heth inherited the property and used it as a summer camp for his children when they came to town from Norfolk. He installed a swimming pool and tennis court so his children could enjoy the farm. Granny Sue inherited the property from her mother after her death, refurbished the cottage, and assumed the role of farm manager. Because her primary residence was off the farm, the main house and its contents continued to decay. When her daughter Susan Duerson inherited the property, the estate showed its fatigue. Susan needed to sell the farm to finance her retirement, but she feared her mom would haunt her if she sold it outside the family. Although an open-market sale was likely within weeks, a cousin stepped in with a vision and a plan. After a mutual agreement, the family purchased the estate and kept it in the family. Committed not to let this happen again, the Hoge family put together their 250-year plan for the future of Belle-Hampton.
Begin with Your Family’s Stories and Core Values
Although a 250-year plan might seem daunting, starting a Family Strategic Plan helps with any time frame: one, five, ten, or more years. The first step is discovering what makes you you, including family history and stories. Your past is where you established your core values. Start with the “Do You Know” quiz. Where does your name come from? Do you know where your parents grew up? What do you know about your grandparents? Do you know where your parents met? When we personally started this process, my parents had already passed away; however, their story was so intriguing that it was memorable to other members of the family, so their story survived for future generations. We were lucky; however, it is paramount to gather stories ASAP to preserve significant events before the inevitable afterlife. Diving into the details will give you your core values which will lead to your mission and vision statement.
Imagine the Future You Want to Create
Once the past is documented, begin imagining your dreams. How old will you be in 10 years? What does your ideal life look like at that point? What are you the most proud of? How would you like to be remembered? Once the objectives are clear for yourself, family, career/company and philanthropy, articulate what resources are required. What capital is required? Make sure you look at finance, knowledge and time constraints. Who else might need to be involved such as a spouse, advisor, experts or various connections? Once a detailed list is finalized, rank them according to priority. The result should be list of your wants and desires visualized in full color. You can add an actual picture for emphasis.
Turn Your Priorities into a Step-by-Step Plan
Next, compile your Strategic Plan by expanding your highest priorities into a step by step guide. A simple example would be a decision to have a family reunion celebration. Steps to achieve the goal starts with the scope. Who is considered family or extended family? Any relative or only first cousins? Then organize into committees and leaders to carry out the tasks. Consider the possibility of a fundraiser for a family cause. Determine a budget and how the event is funded. Research and hire an event coordinator and finalize a venue. Schedule the date and consider the best mode of communication. Organize activities and necessary tasks. Examine details such as goodie-bags, name tags or a photographer. With a completed list determine when to start and which tasks need to be done when. A schedule can now be compiled ready for implementation.
Assign Responsibilities, Set Dates, and Track Progress
During the implementation phase you may want to further define the steps. For instance, determining a venue can be described as “Visit 3 locations convenient to the majority of the family.” Decide on who is leading the task and the roles of the others involved. Choose the date needed for completion with actual appointments scheduled when confirmed. If any expenses are associated with the appointments, budget accordingly. To manage the process, there are various project manager tools such as the Trello App to keep you on task or simply Outlook’s calendar.
Stay Focused with Three to Five Priorities
Although I only gave a couple of examples, finalizing a Strategic Plan for your family might seem daunting. We had a list of 48 items, which is typically overwhelming. My suggestion is to use the 3-5 rule to focus on at any given time. Prioritize and schedule your entire list, but focus on only a handful to implement. My husband and I had several mutual goals we worked on together.
Develop Belle-Hampton into a commercially viable showcase property.
Establish Belle Hampton Legacy Center, a non-profit to help other families with their governance.
Memorialize the finalized family business charter, which includes the mission, vision, core values, education/development, core committees, and structures.
Build a Team to Support Your Family’s Vision
Our dates for completing our objectives are on track for 2027. To get here, however, we relied on guidance from our team. Our Board of Advisors, the Hoge Family Council, Wealth Advisor, and our Family Business Advisor. They say it takes a village to raise a child, but it takes a focused team to implement a family strategy.
Take the First Step Toward Your Family’s Future
With the new year coming soon, what are you waiting for to develop your own plan? It might seem like a mountain at first, but with help from skilled consultants, anything is possible. As Dr. Suess said, “Your mountain is waiting, so…get on your way.”
