Without a Plan, Family Wealth Discussions Can Be Stressful: Survey

Wealth is a taboo topic in most circles, leaving many wealthy families and individuals feeling isolated and ill-equipped to manage the responsibilities that come with it. 

A new survey from the Merrill Center for Family Wealth found that a third of families engaged in increased discussions about their wealth since the pandemic. But many families go into these conversations without a plan, a process or the skills to make the conversations productive, which can lead to unintended stress, family rifts and under-functioning heirs, according to the study.

Merrill conducted the survey in partnership with Bank of America Merrill Lynch Analytics, Modeling & Information between November 2020 and July 2023 among 277 individuals who identified themselves as wealth creators and family members from the second, third and fourth generations, as well as spouses/partners/in-laws and others. Individual families of respondents have $50 million or more in net worth. 

Seventy-eight percent of participant families who had recently had conversations about family wealth said the discussion came up spontaneously. Twenty-six percent said they regretted it afterward.

Forty-eight percent of respondents said financial decision-making is shared among two or more generations. More than half reported that a major challenge when co-managing shared assets is limited governance, such as lack of transparency or clarity about roles and responsibilities, and how decisions are made and by whom.

Just 14% said that the technical complexity of co-managing shared assets is a top challenge, while the remaining 86% pointed to non-technical challenges, such as complex family dynamics and limited governance.

“Our research pulls back the curtains on the intricacies of family wealth, a topic that still remains taboo in many circles,” Valerie Galinskaya, head of the Merrill Center for Family Wealth, said in a statement. “When families learn to navigate wealth together, starting with an intentional plan and thoughtful conversations, they can do great things and thrive.”

Gifting and Distributing Assets

Beyond looking at how families make decisions and communicate about wealth, the study also explored practices around lifetime gifting and the distribution of estate assets.

Eighty-three percent of families in the study provide some sort of ongoing support for adult children or other heirs, including 39% who provide recurring lifestyle support, such as payment of living expenses and repayment of debt or loans.

Fifty-six percent who make or plan to make financial gifts during their lifetime do so with an intent to share gifts equally among their children or other family recipients.

Thirty-five percent of those making lifetime gifts do so on a case-by-case basis, depending on recipients’ age and readiness, their financial need and how much time they have contributed to the family.

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