Wealth Management as a Modern Family

The concept of “family” has evolved far beyond the traditional nuclear model of a married man and woman raising their biological children. Today’s families are no longer defined by a single template but instead encompass a broad and inclusive range of relationships and structures.

For instance, a 54 year old Nigerian man marries a 40 year old woman from Texas in the United States of America. Both parties have 2 children each from their previous marriages and one daughter from their union. This scenario is what is referred to as a blended family. Blended families are a type of family structure where one or both partners bring children from previous relationships and they are increasingly common in all jurisdictions.

Other modern family structures that are increasingly becoming popular include:

• Same-sex couples raising adopted children
• adoptive families
• multi-generational households living under one roof
• cohabiting partners who choose not to marry formally.
• single-parent households
• interracial marriages
• polyamorous families
• relationships that span continents.

These various types of families require professionals to look beyond the standard legal arrangement for wealth management for families and adopt a flexible and inclusive approach that would try to satisfy everyone.

Going back to the scenario above, the 2 children from the man’s previous marriage are involved in the patriarch’s business, which operates and has assets in Nigeria and the USA while the 2 children of the matriarch are working outside of the business in their own professional fields. The parents are worried over any conflict this might bring in the future and they want to ensure financial stability and succession for all the children without unfair to anyone.

These types of family structures raise difficult questions that will need to be addressed on how to plan for the family members. These questions include:

1. Who is entitled to the inheritance? What do the laws in the jurisdiction say about it? This is especially important in blended families to ensure financial security and to prevent conflict between the two branches of the family.
2. Who takes responsibility for the minors and the elderly? Will there be compensation for that person?
3. Do their respective jurisdictions allow for the structure of the family and is there any tax benefit to it?
4. Does the law in their jurisdiction acknowledge same sex marriage, co-habiting spouses and is there any rights to such union?
5. Who is going to take over the family business? How will the roles be shared to ensure continuity to the next generation?

The answers to these questions play a huge role in determining asset distribution, inheritance rights, and financial planning.

Research indicates that the rise in blended families is contributing to a noticeable increase in family disputes, breakdowns in relationships, and litigation over inheritance and estate matters. These conflicts often stem from the challenge of balancing the competing needs of individuals, differing generational interests, and, in many cases, a lack of trust among family members. Such tensions can have serious consequences, not only for personal relationships but also for family-run businesses. As a result, the role of Advisors and wealth management services has become increasingly important in helping families navigate these complexities and implement structures that reduce the risk of future conflict.

Some of the key planning tools and services to consider includes:

1. Creation of a comprehensive Estate plan: This includes drafting of Wills, Trusts, Powers of Attorney, prenuptial agreements and letter of wishes. These can be used to ensure that all types of assets are protected and distributed according to your wishes particularly in cases where there is a remarriage or minor children.

A well drafted Will or Trust will name all beneficiaries accordingly with little or no room for ambiguity. It will clearly state how the estate is to be divided and contain plans to manage the family wealth for generations yet unborn. This includes trusts for education, healthcare, retirement etc. The Wills, Trusts, health directives and Power of Attorney are to be updated regularly to ensure that it always reflects the current realities of the family.

2. Tax planning: Wealth managers ensure that plans for the family wealth includes strategies that would help clients stay compliant with the relevant tax laws across various jurisdictions.
   
   
3. Family Constitution: This is a document that outlines the family mission, vision and values which must be preserved from generation to generation. It would also contain the roles of family members, the dates for meeting, the process of any decision making and conflict resolution.
   
   
4. Ensuring quality communication amongst family members: This involves encouraging early, open communication among family members regarding wealth management and succession planning. Regular family meetings can be held to address significant financial decisions and to review the family constitution paying close attention to the values, expectations, and long-term goals it sets out. These conversations help to build a shared understanding and sense of responsibility, which in turn fosters unity and reduces the likelihood of future disputes, ultimately protecting the family legacy.
   
   
5. Family offices: Family offices help families navigate In a world where love, legacy, and legal definitions don’t always align, Family Offices as set up and constituted by modern families are to ensure that family members are protected, respected, and positioned for long-term success individually and collectively. This is because in today’s world, the most powerful estate plan isn’t just about who gets what it’s about keeping the family together when everything else is pulling it apart. Families must navigate complex emotional, legal, and financial dynamics and embrace strategies that truly reflect and serve the needs of the families.
   
   

However, the effectiveness of these tools can be limited by the fact that not all jurisdictions have legal frameworks that fully recognise or protect certain forms of modern families. As professionals within the wealth management and family wealth advisory ecosystem, we carefully navigate the intersection of family and estate law while also considering the tax implications in each relevant jurisdiction.

CONCLUSION

In a world where family no longer fits a single mold and as family structures change, professional estate and family wealth advisory must also change and move away from the traditional methods to embrace new innovative and sustainable stewardship for family members across generations.