A Non-Negotiable: Talking to Your Family About Wealth

70% of families lose their wealth by the second generation, and 90% by the third. But protecting your family’s wealth requires more than just documents - it requires open and honest conversations with your loved ones.

Or else dilemmas like this arise.

24-year-old was about to spend several hundred thousand dollars on a sports car after receiving an inheritance from his grandfather. The purchase would have been a large percentage of his gift.

He also had a baby on the way.

His Manning & Napier financial advisor happened to know the family across three generations – back to the grandfather who left the gift. So when he called to share this update, she didn't just nod along. She asked him one direct question: what he thought his grandfather would say. He paused. A few days later, he called back: he wanted to use the gift to benefit his growing family instead, his dream car could wait.

This type of outcome rarely comes from a will or a trust document alone. It comes from a family that has talked, for years, about their financial values.

Most families don't lose wealth to bad investments. They lose it to silence.

The most common cause for losing wealth isn't a market downturn or a tax mistake – it's a breakdown in trust and communication: heirs who never understood the plan, or the reasoning behind it, until it was too late to ask.

This is a gap that a will can't fix. A document tells your family what happens to your money. It doesn't tell them why – and the why is usually what determines whether the plan holds up.

Having a plan isn't the same as talking about it

An estate plan with the appropriate legal documents is a non-negotiable for proper wealth management – yet, it’s not sufficient on its own. Just because your estate attorney drafted documents and your financial advisor is managing assets, doesn’t mean your loved ones understand your decisions. That comes from talking.

Some families formalize this with regular family meetings, and others choose a more casual setting. Either way, the goal is the same: an open dialogue that aligns values, intentions, and expectations – around finances holistically, and then any inheritance that may be planned.

Every family member carries their own view of what money is for, shaped by their own experience. Those views don't always match, even within the same family – this type of conversation can help bridge that gap.

Consider these questions to start:

• Was money something our family talked about openly, or something that stayed private?
• What's one financial decision you saw work out really well, in our family or someone else's?
• What do you want this money to do, for you or for the people who receive it?
• What's one thing you're afraid might happen with this inheritance if we don't talk about it now?

The goal isn't to resolve everything in one sitting. It's to hear everyone's views so you can align on your wishes for your legacy and estate plan.

Family Wealth Conversations Workbook

Download a copy of our workbook—filled with prompts, exercises, and reference materials to help you map out your wishes and discuss your plan with your loved ones.

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Remember, fair and equal aren't the same thing

Picture three children trying to see over the same fence. They're different heights, so they need different-sized boxes to get the same view. An inheritance works the same way: children in different life stages, with different needs and circumstances, rarely benefit from the identical dollar amount in an identical way.

Consider another recent example. One family we work with split their estate not down the middle, but according to circumstance: one child raising their own children received help with education costs, while the other running a business received support there instead. Both were entirely on board – because the parents had explained the reasoning ahead of time rather than leaving two documents to speak for them after the fact.

Fair, in other words, isn't about an equal number. It's about what makes sense for each person's life, discussed together, while you’re still here.

Are your heirs ready? Ask again.

Assumptions about whether heirs are ready to inherit wealth should be revisited regularly.

One advisor had a client with a son and a daughter, both in their early twenties. The father wasn't worried about his daughter. His focus was on his son, the one he suspected might buy a Ferrari the moment money came his way. He assumed his daughter would help keep him in check. Then tax season came around. The daughter had a high tax bill, as it turned out she was the selling investments to fund shopping trips.

The recklessness wasn’t on purpose. Nobody had ever really talked about what would happen once the money arrived, or what cautions to take.

The takeaway: "I'm not worried, my heirs are ready" is worth revisiting more than once, and worth revisiting with all of your heirs, not just the one you'd expect to need it.

Give the money a purpose, not just a plan

A family vision statement is a powerful exercise, where together, in two or three sentences, you state what this money is actually for. Not the account balances, the purpose behind them. It doesn't need to be complicated. Something like:

This money is here so no one in our family goes without security or opportunity. It's meant to fund education, help launch a dream, and bring us together. It's not meant to be spent without thought, or to come between us.

Once that exists, it becomes the thing every later decision points back to. A trustee weighing two fair options has something to measure against. An heir facing a big decision, like a young man eyeing a dream car, has something to weigh it against, too.

Start now, while it's still just a conversation

You don't have to have everything figured out before you bring your family into the conversation. But it helps to walk in with a clear sense of your own picture first. You'll know what's on the table, and what isn't, instead of working that out in real time with everyone else in the room.

Talking with one of our advisors first to understand your full financial picture, what a plan might realistically entail, and putting words to your own wishes, can be a helpful first step. This preparation tends to make the family conversation that follows itself go better.

Please consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation. The information in this article is not intended as legal or tax advice.