A model story from practice. This story brings together several situations we deal with repeatedly. It is not about one particular family.
Sunday lunch in their house had one unwritten rule. Money is not discussed.
It held for five years and worked so well that not one of the four people at the table ever mentioned it.
A married couple in their early sixties, assets in the range of twenty to forty million crowns and two adult children. The son runs a business, the daughter teaches, and each of them has built a completely different life.
The parents began thinking about how to pass the family wealth on one day. They came to the first meeting with the idea that the simplest thing would be to split everything between the children in equal shares.
Their wealth, however, was not just a figure on an investment account.
It included a portfolio, property and also money they had put into their son’s business years earlier. Since then it had barely been mentioned in the family.
The daughter knew about that help. At the same time, the parents assumed the question of family wealth did not interest her much, because she had never asked about it.
Only in a conversation together did they find she saw it differently.
After the first meeting it was clear that a 50:50 split answers only part of the question.
What we needed to establish first was what the parents actually want to pass on to the next generation and what role each part of the wealth should play in the future.
First we needed to see the whole picture
We started with an overview of the family wealth.
The investment portfolio, property, other assets and also earlier transfers of wealth within the family.
It was the money put into the son’s business where the conversation paused for a while. The parents saw that help as support at a time when he was starting out. They had never said to each other whether they also regard it as part of the family’s future arrangement.
And this is where it became clear why the handover is worth working through before a family starts preparing specific legal documents.
Each person can see the same family history a little differently. Unspoken assumptions can turn into very concrete expectations over time.
Equal does not always mean fair
The original idea was simple: half to each child.
But the two children were at different points in life, had a different relationship to the family wealth and different ideas about their own futures.
So we did not begin by dividing individual funds, accounts or properties.
First we worked through with the parents how much wealth they need for themselves and what their own financial situation should look like over the coming decades.
Only the capital that will not be needed for their own lives could be given a longer intergenerational horizon.
The second part of the conversation belonged to the children.
Not so they could decide about their parents’ wealth. Rather so the parents would know how the children see their own futures.
That changed some of the original assumptions.
We did not start by dividing the wealth up by account
The task was not to prepare two copies of today’s portfolio.
We needed to create a structure that makes sense for the parents today and at the same time lets the next generation one day take responsibility for the wealth knowing why it was built and what role it was meant to play in the family.
We then adjusted the investment part according to which share of the wealth is to keep serving the parents and which can have a considerably longer horizon.
Some investments stayed unchanged. With others the horizon or the structure changed so that they matched the newly defined purpose.
So an agreement on principles came first. Only from there was it possible to derive a specific investment solution.
The family house is not just a number in a table
The family property was a question of its own.
It held value for both children, but a slightly different value for each. With assets like these, knowing the market price is not enough.
What also enters the decision is what the property means to individual family members, who wants to use it one day, who will look after it and where the money for its upkeep will come from.
Wealth with emotional value therefore needs a different conversation than an investment account.
An investment plan is not the same as a legal solution
Our task was to prepare the investment part so that it matched what the family had agreed on and so that individual decisions made sense in the context of the whole estate.
The specific legal form of the handover is then handled by the appropriate specialists.
Passing wealth to children is not only an investment question. Investment strategy, family relationships, law and tax all meet in it. One advisor cannot and should not stand in for all of those professions.
What it looks like today
The parents have a clearer idea of how their wealth should work in the coming years and what they want to pass on to their children one day.
The money put into the son’s business is no longer a subject left unspoken for five years. The daughter knows how her parents think about the family wealth, and both siblings had the chance to say how they see their own futures.
The investment portfolio also has a clearer long-term logic. The family knows which part of the capital is to serve the current generation and which can have a far longer horizon.
And Sunday lunches?
Money does not come up every time. But it no longer has to go unmentioned.
What to take from this if you are planning a handover
- Start with an overview of the whole family estate, including what has already passed between the generations.
- Work out first how much wealth you need for your own life. Only then deal with what to pass on and how.
- An equal share does not have to mean equal needs. Before you start dividing, name what you want the handover to achieve.
- Find out how the children themselves see their futures. Their idea may differ from what the parents expect.
- With assets that carry emotional value, allow not only for the price but also for what they mean to individual family members.
- The investment, legal and tax parts need to connect, but each of them should be handled by the right specialist.
Your situation will be different, which is why we need to talk about it first.
