Charlise B. Whiteside, the founder of Stonehaven Private Wealth Management LLC, worked for many years with individuals and families who have inherited wealth. We understand inherited wealth, both its intricacies and its obligations.
To be blessed with family wealth can be a wonderful thing. Generally, someone worked very hard and gave up so much to give their loved ones the protection, opportunities, and freedom of having well managed wealth. However, many people don’t understand the two edged sword which often accompanies these fortunes.
Not many sympathize with the responsibilities and pressures that come, hand and hand, with being a part of a family of privilege. They do not understand the pressure of living your life not only based on your dreams, but sometimes sacrificing your own dreams to live up to what those who controlled the wealth expect or may have expected from of those who may receive it.
Some families talk about their wealth and prepare their children for the responsibilities that they will have to address, if they are to preserve and pass on this fortune. However, many families of wealth do not speak about money.
They do not teach their children about how to hire a money manager or how to construct a prudent portfolio. They do not speak about the worries such as “what if you lose all the money or what if something happens and you have to spend it all?” Nor do they focus on topics like “what if you want to pursue occupations and avocations that will not add to the family wealth?” They do not speak about the disconnect between growing up wealthy, never worrying about money and the realities of the effects of inflation and effects of fractionalizing fortunes by the number of siblings in each generation as it is split into separate inheritances.
They don’t talk or think about the changes that will need to occur if you are no longer as wealthy as your for bearers. This can easily happen if you do not budget or pay attention to adding to the fortune. The myth of wealth can evaporate suddenly with time and mismanagement. We work with clients to avoid the old adage of “three generations riches to rags.”
Many wealthy families do not address the fact that gift and estate tax often approach 50% when significant estates are not properly planned. They do not talk about what happens when someone’s will leaves all their illiquid land to one child and their liquidity to another; or their business to one child and their liquid cash and investment portfolio to another. They do not warn that estate taxes must be paid, even if the land or business must be sold in a “fire sale.”
They do not speak about the effect of the high rate of divorce or counsel how to know whether one should or shouldn’t have a pre-nuptial agreement. Nor do they discuss how a pre-nuptial’s construction may affect a relationship; or pass on advice about the creative options that can balance the needs of strengthening relationships as well as preserving a family’s wealth. They also do not speak about how much it really costs to sustain particular lifestyles.
These big issues often are dumped into the laps of those who inherit them. Generally, it is when some event takes place….a death, a birthday, the distribution of a trust, running out of money completely, or some other triggering event. At Stonehaven, we will not only manage your portfolio or trust investments but we are happy to help you navigate these and other issues, which may affect the happiness, financial security, and unity of individuals with inherited wealth.
Many times our client’s grapple with the issues of how much should they leave to their children in order to give them all the opportunities in life without weakening their ability to thrive as individuals, with a sense of self, independence, and confidence independent of their family’s fortunes. Clients wonder how much of their inheritance should they consider to be their own money and how much of their inheritance should they think that they are merely charged with the responsibility of prudent governance over its protection for generations to come? We can help with these issues and we can also be a valuable resource for individual trustees.
Sometimes our clients have jointly owned real estate with siblings or cousins…the family compound, the beach house or the 8000 sq. ft. “ hut” in hunt country. Sometimes problems crop up because one family is too far away to enjoy the property, but they are still expected to share in its expenses. Other times, one family lives in the property and spends hours maintaining it, without compensation; while other family members are resentful that they do not pay rent. Seemingly small things like these often lead to family breaks or expensive litigation where no one wins but the lawyers.
Many families never warn about the unfortunate bickering and positioning to be favored as their parents age or die. Siblings, who grew up as best friends, may lose their way due to unaddressed solutions to effectively managing inherited wealth. ….This could be due to not understanding the terms or intentions of trusts, not understanding what economic realities demand or what prudent money management requires.
Families often do not talk about what it is like to be chosen to be the executor or trustee of the family fortune….to be totally unprepared for the job, but forced out of duty to disrupt your life to do a huge job, fraught with liability, deadlines, record keeping, and generally without anyone being grateful for your efforts. No one speaks about having to do that job while most of the family resents you for having been chosen for a job that if they only knew how difficult it was, they would never actually want to be named as executor or trustee either. Yet often, the unnamed family members will mistrust, judge and say you did not do things to their satisfaction, with too much expense, and with too many delays.
At Stonehaven, we have come up with creative solutions to many situations such as these so that we can help the family remain strong and its fortunes can work to benefit the family’s self-development, security and freedom as their benefactors dreamed; rather than having it wasted in legal fees due to a lack of creative problem solving before the issues grew into animosities.
We are happy to manage your family wealth and help you maximize its benefits, while trying to minimize its pitfalls. Call us to confidentially discuss your situation and see if we can help: 978-430-0150.