As an estate and probate attorney, I’ve worked with families both above and below the $10 million mark. And I’ve noticed some key differences. First, families worth more than $10 million will start to appreciate The importance of clear and open and honest communications. There are no taboos. This includes the parents estate plan and intentions for the future of the family.
This makes sense because starting at around $10 million, it’s possible for a family to become perpetually self sustaining. Below $10 million (and this is just a rough number) there’s really no way that the family can become self-sustaining using its current level of wealth. This turns out to be kind of a continental divide, like the Rocky Mountains. On one side the water I’ll goes one way and on the other side the water all goes the opposite way.
So below $10 million, families have a different approach. They tend to be more secretive in a state planning because the parents don’t want to risk kids fighting over the relatively limited resources. Over $10 million, the family has an incentive to work collaboratively on how to sustain itself.
Specifically, the family worth more than $10 million May will decide to share the parents estate plan documents with all family members so everyone knows what’s going on and can plan and cooperate accordingly. Under $10 million, the family would probably keep the estate plan documents in specifics a secret until the parents have died.
The danger of being secretive is that there’s a lack of checking balances and also any emotions that may be wrapped around the estate will not have a chance to get expressed until after the parents death. He could very well be better for the parents to help the kids understand why they made the choices they did in terms of estate planning. This obviously can’t happen after the parents have died.
I’ve previously spoken about another characteristic of families worth less than $10 million. That is that the families’ advisers tend to not cooperate with each other. The various advisers get paid for selling the life insurance, or preparing the annual tax returns. But the families suffer because they don’t get the same attention to detail (and collaboration among the professional advisers) that the wealthier families receive. However, since I’ve discussed that in another blog post, I won’t repeat myself here.