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Transferring Values—Not Just Wealth—to Your Heirs

Posted on: February 1st, 2022

Transferring Values—Not Just Wealth—to Your Heirs

Many of us have thought about how to best transfer our wealth to our heirs someday. Unfortunately, we see that parents and grandparents with significant assets often don’t spend enough time on passing along the values that helped them build, grow and maintain that wealth.

The resulting “values vacuum” can potentially cause some big problems when heirs inherit large sums. Too often, heirs blow through an inheritance. 

Children might become complacent, thinking that there is wealth around to “bail them out” of trouble; they might never develop resiliency, motivation and other life skills needed to overcome adversity and generate their own success. 

And of course, numerous stories of “affluenza” in the media over the years show that wealth can cause some heirs to believe that rules don’t apply to them and they shouldn’t be held accountable for their bad actions.

The Super Rich (those with a net worth of $500 million or more) tend to understand the importance of values when it comes to their wealth and their sense of purpose in life. They also have plenty of ways to show their kids the connection between the two—such as successful family businesses that heirs can get involved with, as well as single-family offices staffed with top experts who can work closely with families to show the “why” behind decisions made with the family money.

The good news: You don’t need tens of millions of dollars to take a page from the playbook of the Super Rich and effectively help your heirs adopt the values that can serve them well throughout their lives. 

Here’s how to get started.

Clarify your values

The first step to take, if you haven’t already, is to get clear on your own values and attitudes toward wealth and success—and which of those values you most want to instill in your family members. After all, if you don’t know the values that drive your own behavior in terms of spending, saving, working, investing, being charitable and the like, you can’t very well pass those values on to others effectively.

To that end, define the beliefs that you’d like to see heirs adopt and adhere to when making financial decisions in their lives. You can think through this process yourself or work with a trusted advisor to brainstorm ideas. In general, family patriarchs and matriarchs tend to land on a few key values they want to see shared by their heirs.

  • Self-reliance—the ability to financially “stand on your own two feet”
  • Education—an appreciation of the value of higher learning
  • Critical thinking—the ability to navigate through challenges
  • Fiscal prudence—the knowledge of how to live within their means, make smart financial decisions and grow their wealth over time
  • Motivation—the drive to work hard to achieve what they most want out of life
  • Philanthropy—an interest in helping others who need support

Although these are common values, your own list may look somewhat—or very—different. That’s okay. The key is to get clear in your own mind which values you want to pass on. 
Important: Keep in mind that your heirs will likely develop their own values and ideas about wealth and success, even as you look to instill yours. Look for alignment whenever possible.

Ongoing conversations

One of your biggest jobs is to have conversations with family members on the subject of money and values so you can begin to instill your beliefs and hopes. Open lines of communication between the generations are the basis for sustaining family wealth. Communicate the values you care about, and explain why you see those values as so important to heirs’ realizing a good life.

This cannot be a single, one-and-done talk. Instead, over many years as your heirs grow and mature, have ongoing conversations appropriate to their age and experiences. Basic dialogues with a young child about, say, the importance of balancing wise spending with consistent saving might progress into more advanced discussions with adult children about topics such as investment strategies, joint accounts with spouses and college funding. 

The upshot: Start early, then consistently communicate over time, to help them develop a sense of financial responsibility and motivation to achieve. Throughout the years, there will be no shortage of teachable moments in which a values-based conversation can help illustrate your views and instill them in your heirs—from when a child receives a large birthday check to making a decision whether to buy a single-family home or a rental property. And since most people tend to not remember or internalize lessons that are taught only once, repetition and revisiting the topic of money and values can help those lessons “sink in” over time. 

One excellent technique is to use storytelling from your own family’s history to make points about resilience, sacrifice, saving and motivation seem more “real” to heirs. Maybe your grandfather’s early financial sacrifices are what enabled him to start what is now a highly successful family business. Or maybe your own experience with a failed endeavor taught you the importance of being a more careful investor. Personal stories can drive home lessons better than vague lectures can.

Important: Talking about wealth and values doesn’t automatically mean you need to reveal your net worth or how much money an heir may one day inherit. Too often, parents avoid talking about wealth entirely because they think these conversations mean they’ll have to “open up the books.” Not so. You can discuss the importance of being a good steward of wealth without diving into the actual numbers. 

Putting words into action

As vital as values-focused conversations and discussions with heirs are, the most effective way to instill your values around wealth is by modeling those values for your children to see and including them in actions that solidify the importance of those values. 

In short, if you want your kids to share your wealth- and success-related values, you’ve got to walk your talk. Here are some ways to do that at various stages of their lives.

  1. Create a formal family values statement together. As you discuss wealth and values with children, put pen to paper and create a document spelling out the values you agree on as a family—adding to it over time based on new discussions. Although it doesn’t create a formal contract, the act of writing down your values can help reinforce them.
  1. Involve kids in select financial decisions. Give kids real-life experiences with how money, choices and values interact. Start small and safe: Ask younger kids for their input about where the family should go for a vacation based on a set travel budget. Get older children involved in choosing charities or causes the family should consider. Bring adult children into the process of how to invest and allocate family wealth in the financial markets. 
  1. Demonstrate the power of saving and compounding. As early as possible, set up a bank account or even a piggy bank for your kids. When they get money, have them set some aside toward future goals or purchases. And consider matching their deposits, as an employer might do with a 401(k). Kids will quickly see that saved money can mean more money.
  1. Create a family bank. Some affluent families establish informal family “banks” for lending money to their adult children who need funds to buy a home, start a business or pay for some other major life expense. Rather than simply handing money over, the family patriarch or matriarch can act more like a bank that is loaning money to the child—thus creating a more real-world experience that can help educate the child about collateral, down payments, repayment terms and so on.

Live your values “out loud.” You may tell your children you want them to care about helping others in need or being “smart” with their money—but do they see you actively doing so in your own life? Better yet, are you involving them in your efforts? Demonstrating how you live your values can make a far stronger impression than words alone can.

The family business

For families that own and operate a business, one seemingly obvious path to conveying and instilling values is to involve the kids in the company—where (presumably) they can see firsthand the principles of hard work and thoughtful financial decision-making in action, and gain valuable hands-on experience. 

This approach can certainly make sense, but it’s important to tread carefully here. For example, involving younger children in the business in various positions can help them see the importance of being motivated to do a good job and work their way up the ladder. It can also help them understand how the many areas of a business need to work in concert to produce great results—and that no department or person (even Mom or Dad) can do it all. It can also help older children learn to navigate their way through profit-and-loss statements and other financial documents.

That said, forcing a child to get involved with the family enterprise can backfire if he or she has no interest—causing the child to resent the very values you want to instill. In some cases, it’s better for kids to have a part-time job outside of the family’s orbit so they can see what they can accomplish on their own—which could be a great way for them to learn self-reliance. The key is to expose your kids to the business, not pressure them to come aboard. 

Likewise, you might consider asking an adult child to work for a few years at a different company before joining up with your organization—again, to gain a broader understanding of the business world and develop the confidence that can come with making it on your own.


Communicating to your children your values about wealth, success and purpose won’t guarantee that they will avoid negative outcomes—or become the world’s greatest CEOs. But in our experience, heirs who understand how their parents and grandparents view such issues tend to be more driven to make their way in the world and be better stewards of assets they receive—using inherited assets to pursue meaningful lives and stronger communities, for example, rather than for simply hedonistic objectives. 

The key to making that happen: Start talking with your heirs as soon as possible—and keep that engagement going consistently over the long term.

This report was prepared by, and is reprinted with permission from, VFO Inner Circle.  AES Nation, LLC is the creator and publisher of VFO Inner Circle reports.

Disclosure: The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS.

Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS. https://www.kestrafinancial.com/disclosures

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