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Considerations When Managing Family Wealth
Jake Claver
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4/16/2025
Managing family wealth isn't just about money, it's about securing your legacy. Discover the key considerations that matter most! 💼💰
Find more from Jake Claver by visiting the links below:
🖥Digital Ascension Group - https://www.digitalfamilyoffice.io
🖥Join my Mastermind Community at https://mastermind.beyondbroke.com
📱Official social media📱
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Category
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Lifestyle
Transcript
Display full video transcript
00:00
We're going to break down all the different components of what it takes to manage your
00:04
family's wealth into future generations. So let's get into it. The first of those is going to be
00:10
actually getting the next generation involved before it's time. I see so many families and
00:15
have discussions with people that, you know, they stipulate things within their will or their trust
00:20
where there's going to come a day when those assets get passed on to their kids and they're
00:25
going to come into the fold and help manage, you know, the investments or the business or the real
00:30
estate, whatever that might be. But if they really don't have the skills and expertise to do that,
00:35
do you think they're really going to do that well? And most times that's not the case. I've had one
00:40
just the other day, two brothers, you know, they didn't do some of the things that I'm going to
00:44
discuss here and now they're at odds fighting over the commercial properties that their father left
00:50
them. It's just not a good situation. And those kids were even involved in the business beforehand
00:55
but now because there was an alignment in the goal and the vision, which is what we're about to talk
01:01
about next, they really, they're at risk of tearing down everything that their parents built.
01:08
So you want to make sure that the kids are involved. You want to bring them to the office. You want to
01:11
involve them in the business. They need to know what they're going to be managing, what they're going
01:15
to be dealing with and have the skills and expertise when it comes time to actually step into that role
01:20
and so that you can transition away. And so next, you know, just like I discussed there,
01:26
you're going to have to have an alignment of interest across the family. What we do in our
01:31
family office when we structure things is we put together governance documents, one of those being
01:35
a family constitution. And you're going to have your mission statement, your core values, your
01:40
principles, all those are going to be outlined in that document so that the family is all on the
01:45
same page. And that way, when you do pass the baton, they know what the overall goal of the
01:50
family is and there's not bickering back and forth. Now, I will say that you do want healthy
01:55
competition, which is another component of this, in the mix, right? So as you're setting up that
02:02
criteria for the next person to step into that role, you want to put incentives in place and you
02:07
might have multiple heirs that could take that role. And you're ultimately going to have to make that
02:12
decision on who you're going to pass this on to. And maybe it is, you know, you've got two sons that
02:17
are going to run it, but you're going to want to make sure that when your time comes to meet your
02:21
maker, they are well-prepared and they both understand their roles in running that business,
02:27
managing that capital, whatever the family has for assets, you want to make sure that they're in
02:32
alignment for that. And that becomes even more important as the family grows into future generations.
02:37
And we'll get into, you know, how you can kind of mitigate that and put that together
02:41
in a later section here. So the other component that I want to go back to is when you do transition
02:48
that role, this is all, we're all going to have that time, right? There's going to come a day where
02:54
maybe you're in your fifties, maybe it's in your seventies that you kind of want to step back from what
03:02
you have been doing with your family and the business or the investments or the real estate.
03:07
And you're going to want some more time to spend with the grandchildren. You're going to want to,
03:11
you know, take all those vacations and you may not want the whole day-to-day grind that you've
03:15
had to put up with in your twenties, thirties, forties, you know, and again, sometimes longer,
03:19
some people live for that, right? Uh, more power to you. But at the end of the day, there's going to
03:24
come a point where you want to pass the baton to the next generation. And in doing that, I've seen
03:29
people falter. Um, maybe it's because you're scared that the children aren't aired yet. Um,
03:37
they haven't shown, you know, all the things that you had outlined, uh, in the documentation,
03:44
uh, that would allow them to step into that role. Um, but at some point you're going to have to be
03:49
okay with that and you're going to have to have confidence in them. And when you make that
03:53
transition, it needs to be smooth. I've seen other situations where it drug out for years
03:58
as the parents still wanted to stay in and take control and remain in control of the business and
04:03
make big decisions, but they were at odds with where the child wanted to take the business. And
04:08
it was actually in the detriment to the business because the employees didn't know who to go to
04:12
with the problems. Uh, they didn't know who they needed to communicate with. Um, and some people even
04:17
left because of those things. So it needs to be, you know, maybe six months to a year,
04:23
not ideally even faster than that. Um, when you do make the transition from being the leader,
04:30
the patriarch, the matriarch that established the wealth and you're handing the baton down to the
04:33
next generation. And not to say that you don't have some controls, right? So maybe you still sit
04:37
on the board, you just operate in a lesser capacity, uh, and you don't want to necessarily
04:42
let your ego, as we all have one, uh, get in the way of what's going to be for the betterment of the
04:48
family. It's oftentimes the next generation sees things that, that you might not and vice versa,
04:53
you know? So it's, it's hard to navigate these waters, but that's why we're having this discussion.
04:58
So next I want to get into, uh, let's say somebody wants to marry into the business.
05:02
I think that it can be done in a way that it's not intrusive. Um, and it can be outlined,
05:10
right? Again, so when we put this documentation together, you can set forth some stipulations
05:14
on what the criteria that that, uh, child needs to meet with their spouse. Um, and that's going to
05:20
be different across a lot of different families for different reasons. Um, but at least if you
05:25
specified that and, and set forth some of your expectations and communicated with the child or
05:31
the next generation that is, you know, um, looking for that spouse and going to bring them into the
05:37
fold family, then they're prepared for some of the arguments that you might have or opposition that
05:44
you might have when they're doing so. And so again, touchy subject, but this is important,
05:51
especially when managing the family's wealth long-term. Um, the spouses that you're,
05:56
that the next generation chooses, uh, are going to have an impact on how that money is spent.
06:01
Um, you know, some of the long-term goals of the family, those need to be communicated up front
06:05
when making that selection and even courting, you know, that the spouse or future potential spouse,
06:12
um, all those, all those values, principles, things that are in the, uh, constitution,
06:17
those need to be in alignment with their interests as well. Some of those might be philanthropic,
06:22
they might be business interests. Again, you know, if they've got a background in real estate or
06:27
some of the other investments that the family often participates in, that can play a role as well.
06:32
Um, and as the family grows, this is the other thing I had mentioned earlier,
06:36
you know, let, let's say you get three, four, five generations in, um, you know, there's a lot of
06:42
family offices, the Rockefellers, the DuPonts, um, some of the iconic American names that people know
06:49
Argyll's similar. They're five, six, seven generations deep. Um, and they still maintain
06:56
their wealth over that time span. And the way that they've done that is they have annual family
07:01
meetings, uh, whether that's on a quarter or annual basis, they have a board of family members that
07:07
help make decisions that are involved in all of the businesses that are underneath the family office.
07:12
And, you know, obviously there's going to be oppositions from time to time. People are going to
07:17
have difference in opinion and ideas, but if you're able to come together on a frequent basis and
07:22
have those discussions and keep family members involved and engaged, and again, remind them of
07:27
the core values, principles, and mission of the family, they're going to be able to judge those
07:32
against their own ideology and then try to come to a, a conclusion or concession that allows everybody
07:42
to work toward a common goal. And if, if you're doing that, then the, the wealth will last a long
07:50
time. It can transcend multiple generations. Uh, we've all seen, you know, I heard the expression,
07:56
uh, the first generation makes it, the second generation maintains it, and then it's lost by
08:00
the third generation. If, if you don't have a lot of what we discussed here written down,
08:07
established for the family to refer back to, you haven't built these habits, you're not meeting on an
08:12
annual basis. Uh, you're not involved in the partner selection. Um, if, if you're dragging out
08:18
the transition, like we talked about, there could be tensions. There's just a lot of pitfalls that I've
08:22
seen families go through and experienced, um, in my time in family office space that I want to make
08:31
sure that, you know, others that are stepping into this area and establishing a family office
08:35
don't have to deal with. So here's the deal. It's not just about building wealth. It's about building
08:43
up emotional wealth and relationships too. When the patriarch or the matriarch step down,
08:50
somebody's got to step up. And when they're running a business and a family at the same time,
08:56
those roles are vital to the family and its continued success. During times of transition,
09:01
emotions can run high and having someone that can help mitigate that with the family is important.
09:06
So you might consider having that on board. And so that's going to be it folks.
09:09
Managing family wealth isn't just about money. It's about relationships, values, and a shared journey.
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