Safeguarding family wealth
NOT JUST ABOUT MANAGING MONEY A ‘constitution’ or set of rules that go beyond a will can help to prevent division in families.
Social capital – the way in which a family relates to and engages with society and the communities in which it lives.
It’s this social capital that the younger generation is grappling with, says Fleming.
“They are very aware of growing inequality and the disconnect that many people are feeling from capitalism.
“There is a growing belief that wealth can only be created and preserved through generations if it is used to make a positive contribution to the community, as well as providing for a family’s financial needs.”
The report notes that the gulf in perceptions and values between the generations is significantly greater than in the past, which has an impact on long-term planning objectives.
However, intergenerational relationships are less hierarchical than before, which makes discussion on previously taboo topics, like money, easier. Increasingly families are also coming to realise that capital preservation is the easy part of managing wealth.
Far more complex are the “softer issues”, including succession planning, family leadership and engaging the next generation.
“Families realise that instead of the leadership baton simply being passed on to the eldest son, family leadership should be about meritocracy and that training is essential,” says Fleming.
Stonehage Fleming’s local offices also provide support to families who have come into money more recently.
“These can include local business people, as well as sports stars and other talented individuals,” says Johan van Zyl, local office chief executive.
“While the wealth creator may say they do not want to rule from the grave, having a “constitution” or set of rules that go beyond a will for the management of wealth can help to prevent division in families.”