Wealth of Wisdom

CHAPTER 4A Framework for Family Wealth and Well-Being

Richard Franklin and Claudia Tordini

Family business transition and wealth and inheritance planning are frequently implemented with a heavy focus on risk management. Sophisticated mechanisms are crafted to preserve the financial performance of the family's assets. Detailed family governance structures are fashioned. Trusts with clear constraints for beneficiaries to access money are executed, and many other instruments are used to mitigate the risks associated with wealth depletion.

The underlying principle is that preservation of financial wealth is the purpose of inheritance planning. This singular focus on protection of financial wealth may be common, but it can also be detrimental to the family members' well-being. There is a more positive and transformative approach for families to consider like the one we propose here.

A well-being framework provides families with a positive platform to incrementally and over time improve family members' lives. The framework is built at the intersection of well-being theory (supported by a growing body of data) and the family's characteristics and goals. Wealth takes a supporting role and is best viewed as a necessary resource to support well-being.

A well-being framework enables an integrated approach to family wealth and inheritance. Rather than focusing individually on family governance, dynamics, legacy, mission statements, charity, estate planning, and so on, a well-being framework ...