The resources for managing family wealth have never been more powerful and widely accessible.

Financial Literacy

The best way to teach children good financial habits is to show them yours — rather than telling them what to do. (Believe us, as parents we know.) Let’s say you open up an investment account for a child, who is under the age of 21. You could be saving for college tuition or any number of other life events. Have you considered giving your child read-only access to the account? The benefit is that he or she can see:

• Regular contributions (planning and financial discipline)
• Variable returns from (risk reward / trade-offs), and
• Goal-setting (which serves them as adults, when they are making decisions about family wealth)

A little success will reinforce these lessons. If the account grows, your child experiences first-hand the power of good financial choices, the importance of investing, and the rewards from long-term compounding. And if you are a business owner or have a child who works part-time jobs, ask us about how to use a “family pension plan” as a teaching tool. You have several unique opportunities to address the financial literacy side of family wealth.

Protecting Seniors

Let’s stick with read-only accounts for a moment. They are a great tool for protecting senior family members from fraud. Adult children (or trusted third parties) can use read-only access to monitor activity and exercise vigilance in situations where full decision-making authority might be inappropriate.

These arrangements require care, of course, to manage the family dynamics. Second Opinion can help. But it’s worth understanding your options because of the explosion in elder fraud. In a 2011 research report, one major US insurance estimated the cost to family wealth at $2.9 billion annually. It attributed 34% of the crimes to friends, family, and neighbors.

Trust Funds

Trust funds carry a certain mystique. They have have long been thought to be the exclusive domain of America’s wealthiest families, the product of money, complex legal documents, and an odd vocabulary that give spellcheckers a fit with constructs like settlor, remainderman, or Totten trusts among others.

The mystique is disappearing. Fiduciary and investment management fees are falling fast, making trusts and the attendant benefits accessible to a broader range of investors. This is good news because of their many applications for managing family wealth. Some trusts reduce taxes. Some limit personal liability or keep money in the family when marriages fall apart. Some protect children if one or both parents die untimely deaths. Many trusts combine several benefits, which is why they have become so important to inter-generational transfers of wealth. Trusts serve an almost infinite number of purposes.

But many trusts need tweaking because of high, legacy costs. If you are an individual or professional trustee watching over an existing trust that costs more than 1% per annum to operate… Or if you are considering a new trust for your heirs…  Review our Trust Solutions to learn about keeping costs in check, increasing transparency for future generations, and creating checks and balances that separate the fiduciary function from money management.