Hope for the Best but Plan for the Worst
During our life-time, most of us tend to work hard and make sacrifices to accumulate assets and some degree of wealth that we hope will serve to the benefit and well-being of our family. However, in many cases, despite all these best intentions, upon the demise of the owner of that wealth, the assets of his or her hard work and sacrifice could play a role in destroying the very fabric his or her family!
This is not only an occurrence in the families of those happy few who managed to accumulate massive wealth during their life time but can happen at all levels of prosperity. For example, a simple, inexpensive item such as a pen or ring, could carry such sentimental value for one family member that if not properly arranged and communicated to whom it should go could be the cause of the deterioration or even destruction of relationships in a previously close and harmonious family. More often than not, we tend to turn a blind eye to this problem by adopting the attitude that it happens to others but it will not happen to us. Thinking that our own family is so loving and close that it is immune to such possible conflicts.
Wealth owners, both big and small, have latent needs. Latent needs are not obvious—something latent exists as a potential but as yet unexpressed. These needs are therefore hard to identify. As financial advisors, we here at Sadekya feel it is our duty to raise the awareness of our clients about such latent needs and to help families address those needs.
More specifically, we attempt through our many years of experience to equip and prepare our clients to do “a reality check” and confront questions that may be difficult to acknowledge, questions such as:
• When would be the right time to arrange the distribution of wealth and assets to the next generation?
•What would be the best way to protect the family against the risk of in-laws who married into the family and who could turn out to be what is termed a “gold-diggers.” Someone who intends to profit disproportionately from the assets of the family?
•What would be the best way to manage the risk that a mistress or toy-boy (male lover) may pose, especially if she or he comes forward demanding compensation for the participation in the relationship? Such a relationship may be very embarrassing to the family and the person may even attempt blackmail by threatening to publicly expose the relationship.
•Are the assets adequately protected against the risk of divorce with legal devices such as foundation, trust or prenuptial agreements, against possible misuse of the laws that protect the rights of spouses?
•Are sufficient arrangements in place to safeguard the family’s harmony in the case of a subsequent remarriage of the owner of the wealth and assets?Who will receive the power to make decisions with “power of attorney” if the wealth owner becomes incapacitated?
•Who will get what part of the family patrimony, when, and under what conditions?
These are difficult questions for a wealth owner and his family members to confront but ignoring them does not prevent their occurrence. Of course, we recognize that there are many families where this will not be a problem but as with any “storm,” one is wise to hope for the best, but prepare for the worst.
It also important to realize that having no plan in place is actually a plan. If a patriarch or matriarch dies with no plan in place, the law will dictate what will happen with your hard earned assets.
We recognize that is not easy to confront the difficult questions we have raised above but that is part of the necessity that comes with the accumulation of wealth. We highly recommend you to address at least some of them and succession planning is the answer and solution to avoid, your efforts and sacrifices becoming a destructive influence on the harmony and well-being of your family.