Family Capital Produces Wealth Success

I invite you to sit back and think about a pivotal question. In so many ways, it is THE QUESTION: What is important to you?

The answer highlights what’s really meaningful or valuable in your life. At the same time, the answer can also be hard to identify — even to yourself.

Responses may include health, wealth, and influence. But, the primary reply is…family. If you ask most people, who define success in life beyond themselves, family is their focus. It’s not surprising family is so meaningful. Our family is our closest community. Or it should be a close community. But family can be complicated.

Whatever your family story is, Family Capital protects and celebrates you and your family. All of which help us to understand another question: “Why is my family important?” Getting to this point, some people are scared off. Families can be messy and difficult. These questions may have messy and difficult answers. That’s OK. This post will focus on sharing how Family Capital can help you see more clearly and plan for your future more confidently.

Family Capital balances your assets

What is an asset really? I suggest an asset is simply a resource or benefit. Assets can also be blessings like houses or relationships.

In most professional analysis, assets are defined in a financial context…cash, stocks, or interest in a business. Maybe a family business. But all of these assets are quantitative, which means they can be counted or measured. Sometimes to extremes. Ask any CPA.

When financial assets are abundant, they usually take priority. Soon, the focus is financial capital. That’s not necessarily bad…it’s just not complete.

Let’s take a look at how Family Capital balances the scenario, qualitatively.

A qualitative asset is personal or relational. Families have family members and other internal/external attributes, collectively called Family Capital

What exactly does Family Capital encompass? Here is a partial list:

• PEOPLE — your family members + opportunities and challenges
• VALUES — family character traits that you’d like to pass down
• EXPERIENCES — family wisdom + adventures built over generations
• RELATIONSHIPS — connections inside and outside of your family

Is it odd to consider people or values or experiences or relationships an asset? Maybe, but in the context of wealth, including qualitative assets is critical to a proper balance of power.

When it comes to power, Family Capital should take the lead among your assets. Likewise, financial capital can serve your family in a supportive role. This prioritization produces balance.

Financial capital is objective, telling you what is monetarily possible. But, your Family Capital is subjective, your motivational core — your why. Aligning family purpose and individual goals is the focus of Family Capital which is a lot to deal with. But Family Capital has plenty of bandwidth.

What is money for?

You may be wondering “What can Family Capital do for me?” Before we get to that, let’s review the cost of undervaluing Family Capital.

It’s well-known that affluence is difficult to sustain. Usually, by the second or third generation, the money is gone or families are fragmented. Or both. Either way, the primary reasons for dissipation and dissolution are lack of trust and/or communication, poor preparedness, and ineffective leadership. At Prosperis, we refer to these negative outcomes as wealth failure.

Good estate and financial planning produce effective processes or products to transfer monetary assets to rising generation. Such frameworks are important but typically do not fully address family dynamics or reflect changes that take place over time. As a result, most traditional planning is incomplete in service to Wealth Success.

Dan Scott, a Family Legacy Planning attorney and friend of Prosperis Partners, puts it simply: “Wealth Serves Your Family, Not The Other Way Around.”

When Family Capital takes the lead, your financial capital will follow. With all of your tangible and intangible assets laid out in front of you, it becomes clear that Family Capital is primary and financial capital is secondary. In other words, when your resources serve your family, a wonderful synergy occurs.

Your legacy gets a “step-up”

Have you ever wondered which of your core values you’d like to pass along to your children? How about your grandchildren?

What’s your family story? How can you be sure it plays a part of the future?

How about the purpose of your wealth? Is it written down?

All of these are only a portion of your family legacy and require careful thought.

Family Capital helps you assess, acknowledge, and take action to preserve your family legacy for many generations to enjoy. You might think of family legacy planning as a foundation to your estate plan.

In financial planning, appreciated assets get a “step-up” in cost-basis at the owner’s death. When those assets are passed to the rising generation, they are free from whatever tax liability the provider might have faced.

A similar process occurs with Family Capital — you can leave a legacy of personal potential, positive core values, memorable experiences, and strong relationships that elevate rising generations.

When family legacy planning takes a step forward then trust, preparedness, and leadership will also move forward toward growth and development. This careful stewardship leads to Wealth Success.

“Present and future value” for Family Capital

Family Capital might seem long-term or abstract. You might even be more concerned about what’s going on at this moment in your life than in the future.

Family Capital offers clarity to address any concerns for today as well as tomorrow. Current challenges will benefit from increased awareness of the needs and goals of your family members.

At the same time, the increased clarity from addressing concerns today also benefits tomorrow. The foundation you build now is what will produce Wealth Success for years to come.

True “risk and return”

Research shows that 95% of wealth failure is caused by a family breakdown while faulty estate and financial capital plans is only 5%. Yet, most affluent people devote more effort and resources to financial plans than to family legacy planning.

At Prosperis, we address that imbalance. We help you focus on your Family Capital — which is what’s most important to you and also the most decisive in determining what your legacy will be.

We help you address your family as the area of life with the most serious risks and also the greatest potential for return. We work with your attorneys, accountants, and financial advisors to make sure that your money serves you, your family, and your heirs as wisely as possible.

Consider harnessing Family Capital with guidance from Prosperis Partners, a renewed sense of clarity takes place. And clarity leads to strength.

Strength? Yes, strength to decide, strength to move forward, strength to make adjustments, strength to build awareness, and strength to create understanding in your family about the positive future you are creating.

As your life proceeds from this point forward, Family Capital is there to remind you of what’s important…and why.

It also provides the means by which you can achieve your most meaningful and lasting objectives.

Let’s get started building your legacy of Wealth Success today.