Reduce Money Conflict by Instituting These 2 Key Elements

Conflicts can arise in families with family businesses in many areas, but one that seems to be prevalent and I see in many of these families is: conflict around money.

When there are family members both in and out of the family business, the topic of money can become heated when differing objectives are striving to be served. As the business grows, the business “side” may very well need and want to re-invest profits in the business, pay down debt, or expand while those not in the business may want their distributions or dividends to grow. This is a natural tension that can disrupt any family enterprise and family heart.

Families who want to sustain the family across generations while continuing the family business have had to create successful models to keep the harmony of the family objectives in partnership with those of the business. A successful model is one that codifies the purpose of the family money with the purpose of the business so both can be understood and appropriately developed.

Because individual expectations can disrupt what is being built or developed, it is critical that purpose be defined and codified by all appropriate family members. It is also important to conduct annual reporting meetings so each “side” is aware of the sustaining objectives of each other and stay in high communication with known expectations. This will reduce conflicts between the two entities. Without purpose, cohesion gives way to individual agendas and behaviors which in turn, ignite conflicts.

The Purpose of the Family Money is a Key Ingredient to the Family’s Mission

You probably know, or at least have read, about the benefits to developing your own purpose and having your own mission. It clarifies your life, making your life simpler. You build direction, energy, and an added dollop of vibrancy. Phil Knight said of purpose, in his memoir, Shoe Dog, “If you’re following your calling, the fatigue will be easier to bear, the disappointment will be fuel, the highs will be like nothing you’ve ever felt.”

Now, what if this idea of creating a purpose or mission was added to a family’s culture? Would that be novel? Although it might be for your family, it turns out that most families who have stayed connected across generations, have done just that, created their sense of purpose and/or mission. Why? Because doing so creates a bridge of connection in which a sustained feeling of harmony and unity is fostered. It has to. Each family member has bought into this sense of purpose. They are all supporting this mission in ways that mean something to themselves personally as well as for the benefit of their family in generation after generation.

A key ingredient in this family purpose is the purpose of the family money. Money moves and without purpose, it moves aimlessly. When there is a purpose to the family money, it becomes easier to talk about money. This is so because there is a framework around the money with its boundaries and limits, opportunities and possibilities. When family members are included in developing the purpose of the family money, they can determine how and when to use it and as importantly, understand the relevance of this shared money as contrasted with their own money.

Tell me what went through your mind regarding your family’s purpose and the purpose of the family money to the family spanning generations. I would love to hear your comments.

Responsible Stewardship is Key to a Successful Legacy

For families with businesses, there are issues that surface as the family grows and ensuing generations get involved or migrate away from the family business.

Conversations about the business that may have started in the living room at home, moved to the kitchen, then a conference room then to a board room, often become a struggle as families grow and as individual agendas develop. Working well together, across generations, can become tense when visions are not aligned, and responsible stewardship is not defined. Competing and contrasting priorities due to generational differences, ownership positions, and desires for the business as contrasted with desires for the family harmony, surface.

It is not natural to manage such complexity. Like a garden who needs proper care and maintenance to stay healthy, relevant, and vibrant, a family is best served by developing a disciplined and purposed component to their family and family business dealings and becoming responsible stewards of what they are growing and eventually, passing down.

Determining an initial purpose to both the family and family business initially separate the two entities so they can clearly define themselves independently. Agreeing on and articulating the value, vision and mission of each entity across generations is key to being responsible stewards. Adapting and becoming comfortable with change is the responsibility of each generation.

Questions to consider asking at home:
• Who do we want our family to be, as a family?
• What do we want our family to represent in the community?
• What is important to us as a family: what do we believe in? What do we stand for?
Creating purpose, mission, vision and family teams to develop the family’s success goes a long way to sustaining intergenerational trust and sustainability.

Questions to consider asking about the business:
• What is the purpose and mission of the business?
• Is the business meant to develop as a business or build family wealth?
• What do we need to do to support our working together?
• How do we communicate business information so it does not take over or interfere with the family environment?
Knowing the purpose of the business, communicating that to the family, developing trust in leadership development are all critical to successfully passing a business legacy and leadership from one generation to the next.

Leave me a comment on your thoughts or experiences on this important topic. I would be delighted to read your comments.

Do Not Forget the Past; It Provides Mighty Support

When we forget those who have come before, like our great- grandparents, we forget our history. When we forget our history, we must begin again leaving new footprints that are themselves, swept away and forgotten as our great grandchildren look back at photos of us and wonder who we were.

 

Contrast this with those families who have captured, and meaningfully nurture the values and enduring traits of those who have come before them as a pillar to support their own lives today and tomorrow.

 

If you do not care how your family will thrive or if it will drift into a fog of insignificance, your family’s history will play out as it has for centuries for most families. Great grandparents have no meaning, they have been forgotten. New generations start afresh as if nothing came before them.

 

But if carrying on the spark of “what matters most” to your family, as a group of like-minded connected individuals, then your family story is an important element to your family’s success. And you must create that story. It will not create itself.

 

Researchers at Emory University found that “…family stories provide a sense of identity through time, and help children understand who they are in the world.”  When adolescents can see the values and traits they share with past family members, they form a stronger sense of well-being and a stronger sense of identity.  This Emory University study also showed that ​there is real benefit in sharing the stories about where the family came from, both geographically and through their values. Family stories keep families connected through generations by its narrative.

 

Your story, the one that will live on, will include how you met challenges, what successes have meant to you, what values you deem to be important and why and how they have guided you. Your story will describe how you came to value what you do value so those who come after you can understand themselves better by hearing from you. When they understand themselves better, they have more confidence and feel more secure in a world where those without this foundation, struggle to be seen and known.

 

Do you have a family story in your family, one that benefits its members, is shared because it came from the “author’s” experience?  Let me know. I would love to hear your thoughts on this important recommendation.

 

 

 

 

 

 

Preparation is a Great Inheritance Tool

I have been part of conversation focused on what the best thing to inherit is. Some think it is cash. Some think it is real estate. Some think it is a portfolio of assets to be reinvested. I suggest it is being prepared, being prepared to become stewards of an incoming inheritance.

 

Studies show that for 90% of families where wealth makes it to the 3rd generation, it is gone by the end of this generation. This is not due to a fault of this generation. They are merely responding to a lack of preparation and instead doing what is naturally the course, spend, squander or squabble over the inheritance.

 

Each generation has a unique view and interpretation of its partnership with money and the family. The first generation carries the vision, the passion and focus to build a new company. This generation tends to sacrifice their personal life for the business. They must do so in order to build a successful enterprise.

 

The second generation has a different perspective. They have grown up with explicit or implicit expectations placed upon them to build on the family fortune that often conflict with their own personal objectives. Understandably this can create great friction. Couple this with squabbling that happens between siblings over the purpose of the wealth and there lays a sure recipe for even bigger problems. Studies confirm that 70 % of families lose their wealth by the end of the second generation.

 

For those families, whose wealth makes it to the grandchildren, there is a new perspective. The third generation is farther removed from the creation of the wealth. They are accustomed to being wealthy. From their point of view, having wealth is a birthright. They have never seen or been exposed to the struggle or the reason of making money. They are free to dream and create. They have never had nor needed the tools to build a productive life. They are only familiar with spending money.

In three generations, a family’s past and all its treasures will be lost and forgotten. Memories will fade as new generations spend their precious time scrambling to build a-new.

 

But when a family prepares its present and future for its inheritance, it can grow its bounty. A family who conscientiously grows and develops its assets, is called a legacy family. This is a family where the money as well as the family culture develops and is transferred from one generation to the next with purpose and intention. This type of family uses appropriate systems, tools and activities to stay connected through generations maintaining shared purpose, understanding, and trust. This family becomes a prepared family transferring its wealth with confidence it will grow in the family for generations.

 

Let me know your experiences on preparing inheritances for long term family connection. I would love to hear from you.

Sometimes, Money is Hard to Talk About. But…

When money can be talked about without the added emotions of hidden blame or unrelenting shame, money conversations can become like other productive conversations: meaningful and connective.  When money conversations become supportive rather than decisive, money conversations can be engaging and powerful. Instead of blaming others for their behaviors or shaming ourselves for behaviors and habits we are exhibiting, we become supportive of another’s and our own objectives with money. We become engaged in conversations as we understand others and our own motives and intentions with their and our own money. We can then put in play powerful actions to attain our common objectives. What makes this transformation from feeling divided to feeling unified around money?

When we understand each other’s views and stories about money, we become more engaged with their struggles and triumphs with money. When we take money “out of the closet” of isolation, blame, or shame, and bring it into our shared lives, as partners and as a family, money becomes a productive tool.

What restrains you from talking about money? Is it lack of confidence on your ability to make consistently good decisions about money? Is it an inability to engage your partner in conversations you think are important with your money?   Is it an inability to know how to approach planning your financial goals? Is it an inability find time to spend on financial matters and if you had the time, not knowing how to frame a conversation on financial matters? Is it a fear that conversations about money will lead to tension or disinterest from your partner? These can be dealt with productively and effectively.

The first question you can ask someone you share finances with is:  What is important about money to you? And let them response without interruption from you. You can learn a lot by asking this one question.

When you find out what is important about money to yourself and to those with whom you share financial interests, money will transform from being hard to talk about to being a welcomed subject of conversation in your house.

Let me know what keeps you isolated with your money or, how you have created a bridge from isolation around your money to it being a productive tool in your and your family’s life.

 

img_5830

Prepare Your Family for Money It Will be Inheriting

It is estimated that 20,000 families will each transfer over $20,000,000 to the next generation next year. They will continue doing so, it is forecasted, for the next twenty-nine years. Although this may sound fortuitous, research tells us that 70% of these families will find their wealth gone by the end of the second generation and by the end of the third generation 90% of these families will find their wealth squandered or spent. Unless they take steps to keep the wealth, families will find themselves falling into this statistic.

Money that has been amassed, will be gone, for most families, by the time their grandchildren are thinking about what they can pass to their heirs.  The great estate and trust planning coupled with the precise tax and investment positioning, although essential, is not enough. There is an element that most families do not put in place to ensure that their money passes to next generations intact. And that missing element is the preparation of the family for the receipt of the money.

Heirs need a blueprint and a roadmap to know how to sustain the wealth through the generations. They need to master skills of leadership, and family cohesion to successfully steward their new responsibilities associated with the money. Only when families have and master the roadmap to success, will they be able to grow cohesively as a family for many generations.

 

Let me know how your family is attending to preparing the family for its roles as financial beneficiaries. What kind of conversations are you having? How do family members feel about this forthcoming transfer? How is the family talking about the transfer of financial stewardship?

img_5830

How Will You Be Remembered? How Do You Want to Be Remembered?

How do you want to be remembered? How will you be remembered? Is there a gap between the two responses?

If so, identify an element to that gap that you can address and take action on. Then, craft the first action step you can take towards bridging that gap. For example, a woman I spoke with wanted to be remembered as a creator of evocative paintings. When I asked how she would be remembered she said that she would not be remembered as a painter as she kept her paintings in her studio.

Realizing that she would most likely be remembered differently than how she wanted to be remembered, she decided to put a few pieces on walls in her home. She did not stop there. She organized an art show for family and friends. What began as a bridge to gap the distance between how she wanted to be remembered and how she would be remembered became an annual “Get Connected with Art” Show (now celebrating its eleventh year) where select artists, their families and friends came together to share their legacy through art.  Art pieces were sold, auctioned, and given away. This woman is both ecstatic and amazed at what resulted by addressing a gap to her legacy. She will now be remembered for her art…and much more.

How will you be remembered? How do you want to be remembered? Are they aligned? What is the first step you can take to bridge the gap? Let me know your thoughts on this topic.

1st-choice-2013-05-05-florida-orlando-gatorland-stork103-final-bvt

The Experience that Connected the Family Beyond the Photos Was Worth So Much

Knowing she was dying, Anne wanted to make sure her children knew who all the people in the pictures were. So, together, they went through five albums and hundreds of loose photos that reminded Anne of her past, her heritage, the things she did, and the people to whom she was connected by blood, but knew little about.

 

The first time I stopped by, I was shown where the photo albums and most of the loose pictures were located but Anna did not open the albums.  The second time I came over, Anne instructed two of her adult children to show me the pictures on the guest room wall and explain who everyone was in those photos. But her children were unsure of who these people were. Yes, they had listened as their Mom went over the pictures with them, but they quickly forgot the information as these people did not mean anything to them. The photos were merely pictures of the past without anything more to connect with them.

 

So when I returned to the room where Anne had set up her daily life, I asked her to step back, in her mind, to a time of her life, when she was a little girl, 10 or younger, I could see her expression change as she remembered that time in her life. I then asked her to conjure up someone, perhaps a school teacher, a religious teacher, a sports coach, a friend’s parent, an after school organizational leader, someone who had a tremendous positive impact on her. Without hesitation, she exclaimed that she was thinking of her friend, Lisa. I asked Anne to describe Lisa which Anne did, a smile growing on her face, her eyes sparkling with joy and contentment. I then asked what one stood out as being a powerful trait that Lisa had. Again, without hesitation, Anne gazed into my eyes and boldly stated: “Acceptance. Lisa showed me then, as she always has, the power and possibility of acceptance.” Delving into the importance of acceptance to Anne became a powerful point of Anne’s story. Tears welled up in her eyes as she talked about the power and beauty acceptance has had in her own life.

 

I, who has known Anne for ten years, felt a shock wave confirming my own experience of how important acceptance has been to Anne. Anne confirmed this by saying acceptance is one of the most important principles and traits to her. She smiled. I looked over at her adult children, who had witnessed this conversation and their eyes expressed a sense of shock as they just learned something about their mother they had never known. It was a profound moment of great bonding.

 

As her children witnessed a greater sense of their Mother, tears came to their eyes. They said: “We have gotten to know our mother more powerfully in this conversation and in ways we will never forget and in ways that we can carry forward and nurture. We wish we knew the people in the photographs like that. This is where the connection is, not in the scene they are in or the pose they have struck.”

The Family Mission Becomes the Family’s Valuable Compass

By drafting a family mission statement, you are providing your family a compass to guide it on its journey as a cohesive unit through the years, through individual successes and challenges as a cohesive unit This mission becomes the family’s compass to guide it as a unified unit while also building independent and productive individual lives.

Today it is common to find a break in connection within two generations of a family. Siblings grow up, form their own families and meet up again only on social media and occasional family gatherings. Without a common and shared bigger purpose their connections weaken with the growth of their own lives and families.

Having a common purpose that is actively developed and supported by all members creates bonds of trust and a community of companions that stays connected. Their compass becomes their trusted anchor and guide. It remains steadfast through their lives.

It does not take that much to create a family mission statement. Here is a simple checklist to consider as you guide your family or your clients’ families to staying connected for generations.

  • As a family, identify and talk about your individual as well as your collective values. This provides an opportunity to ask yourself both as an individual and as a family: “What matters most to us?”
  • Determine together the mission of your family. This is the opportunity to ask yourselves, as a family:” What do we stand for?”
  • Create your shared mission statement that, as a unified body, you want to develop with your strong foundation of unified values. This becomes your community compass
  • Discuss how each individual can add meaning to the family’s shared purpose and mission with their strengths and values and actions that strengthen the mission and their bond.

 

Having a family mission sets roots for a family’s heritage and legacy to develop for years and generations to come. It is a rich compass for a family to nurture and perpetuate.  

Leave me a comment with your thoughts on building a family compass by finding its mission. I would love to hear your thoughts on this topic