1. Name
Title
FAMILY WEALTH MANAGEMENT: GENERATIONAL WEALTH CONVERSATIONS Helping families successfully transfer wealth
Family wealth transfer is not just about getting financial assets to the next generation. It is also about how to pass on what we think is important AND how to avoid damaging our children's relationships with each other. I think you would agree that if I leave my money in such a way to my family that they won’t have to pay a penny in taxes but then something happens in the transfer process that leaves them unwilling to be in the same room with one another - I've failed.
What kinds of ideas and tools are available to help you, so that your family has significantly more success in seeing the estate you've worked so hard to build serve your family well and hopefully last through more than one generation.
MFS does not provide legal, tax or accounting advice. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances.
The views expressed are those of the speaker and are subject to change at any time. These views do not necessarily reflect the views of others in the MFS organization.
© 2019 MFS Investment Management®. 111 Huntington Avenue, Boston, MA 02199

2. GENERATIONAL WEALTH CONVERSATIONS
Understand: why transfers fail
Plan: to avoid mistakes
Communicate: to engage and educate
As you set and then communicate goals for your family, these three things can help:
Understanding why transfers of wealth often "fail."
Being familiar with what planning steps you can take to help avoid these common and costly mistakes.
And lastly, knowing how you can communicate your plan and your wishes with your family, to reduce the likelihood that they will make mistakes when the time comes.
Let's tackle each of these three things.

3. UNDERSTAND: WHY TRANSFERS FAIL
Parents
Don't have a plan
Don't communicate the plan
Heirs
Fight each other
Fight the plan
Don't get/accept advice
Let's look at the big picture first. Let's review why transfers of wealth often fail. Transfers often fail because:
Parents:
Don't have a plan.
They don't take the time to fully consider who they want or need to provide for.
And they don't take the time to consider how they want the loved ones to use what is passed on/inherited.
Don't communicate the plan.
Even many who do have a plan fail to communicate their plan to loved ones before the time comes; there's no discussion with individuals or as a family as to intent, wishes, ideas, hopes, dreams.
Heirs:
Fight each other after mom and dad pass.
Personal histories, past squabbles, different lifestyles...all can bubble up and often explode when parents pass away and estates are passed on. And this is not just the case with the money. This is often even more an issue with family treasures and mementos.
Fight the plan.
Even when a plan is documented and seemingly legally binding, there are stories galore of families that fight not just each other but the plan itself when the time comes to distribute assets. This is often the case because they didn't know what was coming, they were caught by surprise.
Don't get or accept advice.
Many heirs don't seek or accept advice (from their parent's or their own financial advisors), and end up making costly mistakes at the point of transfer or foolishly squandering assets.
Don't have the skills or expertise to manage inheritance.
Even mature/adult heirs often don't have the experience or expertise to wisely manage newly inherited money. They may not yet have a financial advisor, they may not be getting robust advice, they may have poor financial management or planning skills, or the amount of inherited money may catch them off guard or seem limitless.

4. UNDERSTAND: WHY TRANSFERS FAIL
Comfortable discussing with your adult children
(Extremely/Very Comfortable)
Let's talk about one of the key reasons why transfers of wealth fail: and that is that parents don't communicate their plan with their heirs.
But first, let's acknowledge that one of the top five things adults don't want to discuss with their kids is:
Money.
We are not comfortable in disclosing money to our children….but why is that?
It is commonly thought that the fear of seeing greed in our children is the number one answer. Number Two is our concern that they won't strive as hard in life.
Source: MFS Heritage Planning Survey, October See page 15 for methodology.

5. UNDERSTAND: WHY TRANSFERS FAIL
Have discussed family wealth management with advisor
(Base: Advised)
Helpfulness of family wealth management discussion with advisor
(Base: Advised)
Not very/not at all helpful
Somewhat helpful
Extremely / very helpful
Particularly Gen Y (76%)
Yes
31%
Yes
Yes
No/Not Sure
69%
Yes
No/Not Sure
No/Not Sure
No/Not Sure
First, Most families have not had a family wealth conversation and are not all that interested in having one. On the other hand, the families that have had one have generally loved doing so.
We have a perception that family wealth discussions are all about trusts, tax strategies and insurance policies. Rather, those are just tools your advisors might use to help you try to achieve your family wealth transfer goals.
The real purpose of a family wealth conversation is to affect the impact you have on your family and community, both now and after you're gone. That can be a very interesting, and exciting, topic, and is why we find that most families that set and communicate their family wealth transfer goals find it useful.
Source: MFS Heritage Planning Survey, October 2018, See page 15 for methodology.

6. UNDERSTAND: WHY TRANSFERS FAIL
What Investors Will Do With Any
Inheritance Money
Why Investors Have/Expect to Move Inheritance Money to a Different Firm
Have advisor relationship elsewhere I am happy with
38%
Better investment opportunity elsewhere
31%
Desire to minimize firms I do business with
24%
Geographic distance (firm/advisor not close by)
23%
Not a significant enough balance to justify keeping it there
17%
Need more help than would be available
10%
Dislike firm/advisor it was with 9%
Prefer to work with an advisor my own age 6%
The chart on the left illustrates what investors will do with inheritance money. 36% express that they would move all or some of their inheritance to another advisor. 25% stated that they would keep the money where it is.
The chart on the right illustrates the reason for moving the inheritance to a different firm. The majority have expressed that they have an existing relationship elsewhere, they can find better investment opportunities elsewhere or they prefer to minimize the number of firms they do business with.
Source: MFS Heritage Planning Survey, October 2018, See page 15 for methodology.

7. UNDERSTAND: WHY TRANSFERS FAIL
Heirs and the family cottage
Here's the most classic example of an estate transfer that fails.
Let's pretend for a minute that you all at this table are my children. We've had a vacation home since you were kids and we spent some time there every summer, even after you were adults and had your own children. All of us have great memories of the place. I want this to continue, so I leave the home to all five of you in equal share. Now, you (first child) live half an hour away, you (second child) live a couple hours away and you (last 3 children) 3 have to fly to get there. What does your relationship look like 5 years from now? We've all seen this happen. The best of intentions lead to the last thing we wanted. It can be avoided with a simple conversation before anything happens.
The same thing can happen with any tangible property that have that has emotional value to your children. It could be grandpa's watch, a piece of furniture or a favorite painting. The key is having a plan the family agrees is fair or understands before anything happens.
One idea is a "round robin" where each child picks a number out of a hat and then they pick things in that order. For example: 1,2,3,4,5, then 5,4,3,2,1.
Thought, communication and careful messaging is a key to success in passing on assets of any kind.
Another way to tell that story: How many of you have either had this experience or have friends who have: the next generation inherits the family cabin, and it just ends up in disaster: one kid wants to remodel another doesn't. One kid wants to pre-schedule summer weekends, another wants to "play it by ear". One kid wants to be bought out because they live in NY, and no one has enough money to buy him out? Leaving the family cabin without any kind of leadership instructions or advice is the quickest way to in-family fighting. Think "Harmony". GOVERNANCE. Communicate.
Here's what we have covered so far: Why Transfers often Fail….Now let's talk about steps you can take to avoid mistakes.

8. PLAN: TO AVOID MISTAKES
Create a family "map"
Identify legacy needs for each
Now, let's shift gears and talk about some things you can do to avoid mistakes in your family.
First, if you haven’t already you'll want to create a "family map" for your family. Who's your family? Who will you want/need to provide for?
Parents: Are they Living? Caregiving needs? Financial support needs? Grandparents living? Same questions?
Children from current/previous marriage: How old? Are they Minors still ? Of legal age?
Grandchildren/Nieces/nephews: Are there other family members you may need to care for?
Any non-family members to build into your plan?
Special needs: Are any people on your map special needs in any way?
Next, identify your legacy needs and wishes for each family member. Who do you need or want to provide for and in what way:
Parents (grandparents?): What happens if you pre-decease them? Do your plans need to include financial or other care for them? Should a Trust be written or updated, to provide for them if you pass away first? (Also worth discussing: Do they have Durable powers of attorney in place? Do they have Medical Directives in place? Do those who have been named have ready access to those forms (perhaps electronically) for use in an emergency?)
Children from current marriage:
Are there minor aged children? Have you named Guardians in writing? Have the named guardians met your advisors?
Are there Adult (over 18) children? Do they have Health Care Directives (Medical Directives) in place? Have any been married or divorced? Are their beneficiaries current? QDROs addressed? How are they financially? How well do they manage money? What are your current and long term concerns about their ability to handle their finances/inheritance?
How well do they all get along? Which one do you most depend on? Which ones?
Grandchildren/Nieces/nephews: Have guardians been named if still minors? Do you want to include them in your legacy planning/beneficiary designations? Family education Legacy or other college savings plans?
Special needs: Are special needs trusts in place? Have the named guardians and executors/administrators met your advisors?

9. PLAN: TO AVOID MISTAKES
Next, use your family map to have a planning conversation with your attorney, tax professional and financial advisor. Start or review your plan. Then routinely review and update both your map, and plan, with your advisors.
Some of the documents or steps you will want to review or create include:
Will (especially for naming Guardians for minors)
Trusts (including Special needs trusts, or Trusts for non citizen spouses). Also important if you have a larger total estate or if you own a family cabin/cottage, or family business. Introduce your Executor to your advisors.
Durable POA.
Make sure your designee knows they've been named, your intent, and has access to a copy of the forms in an emergency.
Beneficiary designations for all IRAs, employer sponsored plans, insurance policies, annuities. Don't inadvertently disinherit loved ones. Review these annually. Introduce your beneficiaries or your "alpha child" to your advisors.
For many families, you will also want to work with a financial advisor on:
Annual Family giving plan; legacy
Overall Family financial plan
Next, some of the most important planning you do will not be on legally binding documents, but will be the "messages of love" you create and leave for your loved ones:
A "map" to guide those who will settle your estate. Have you ever settled the affairs for someone? Was it easy or hard? Usually hard because… there was no "map" in place for where the accounts, documents, keys, advisors, etc. were.
Letters of guidance/instruction: Write out what you want your loved ones to remember, know or do in settling your affairs and assuming their inheritance.
Family treasures: some of the greatest breakdown of family well being after the death of parents happens over the family treasures: furniture, jewelry and knickknacks. Make a list of who should get what. Or put stickies under/behind each with who should receive it so they know what YOUR wishes were when the time comes. Or have a family meeting while you still can, to help loved ones pick and/or draw straws to see who gets what when the time comes. Often we have NO idea which family member treasures which family keepsake, and we have no idea of the heartache we create after we pass.
Love letters: one of the greatest legacies you can leave is a hand written letter to those who mean the most to you. Whether a one time letter written long ago, a journal or an annual update, leave a handwritten note to those you love.

10. COMMUNICATE: ENGAGE AND EDUCATE
Engage family members early and often:
Account openings
Gifting discussions
Joint meetings with advisors
Educate for tomorrow:
Who: to talk to when the time comes
How: to avoid mistakes
What and where: documents and accounts
Lastly, engage and educate your family members (of all ages) today:
Account openings
Any time you open an account for them that you want them to know about, include them in the meeting with your advisor and talk about what you're doing and why. If that means waiting until they're in town for a visit, do so. This can include savings accounts or gifting accounts for kids, or college savings accounts.
Any time you add funds to an account for them (one that you want them to know about), include them in the meeting with the advisor and talk about what you're doing and why.
Gifting discussions
Any time you make a gift to a family member, whether it's a child or an adult, consider how you'd like the recipient to use the gift, and then consider inviting the recipient to join you and your financial advisor to talk about the gift. Joint meetings with advisors
Invite your trusted adult daughter or son ("alpha" child) to join you for an annual meeting with your advisor, so they each get to know the other.
Ask if your advisor would consult with your adult children to share with them planning strategies relevant to where each is in their own planning.
When appropriate, invite your children to relevant education events hosted by your financial advisor.
Educate for tomorrow
Who: make sure your children have easy access to a list of the names and numbers of all of your legal, tax, insurance, employer, financial contacts.
How: make sure your loved ones know how to avoid mistakes when the time comes.
Mistakes can include costly tax mistakes if inheriting retirement assets. Meet with your beneficiaries and financial/tax advisor to review what NOT to do when the time comes.
Loved ones often make the mistake of spending inherited assets too quickly because it seems like there's enough to last, wasting the legacy you've left them. Meet with your loved ones and financial advisor to talk about what you hope they will do (and not do) when the time comes. Consider putting your thoughts in writing….
What and where: protect against the heartache of an unintended stress when you pass on: leave whoever needs to settle your affairs a detailed "map" as to where everything that will be needed to settle your affairs can be found.

11. COMMUNICATE: ENGAGE AND EDUCATE
This is arguably one of the best planning resource tools on the market for helping families communicate to or with their loved ones. This workbook allows for the collection of all kinds of details that a loved one might not be aware of, in the event of the death of their spouse or parent. In addition to traditional pieces of information like who is the family attorney, accountant, insurance agent, etc., it also collects info on arcane things like:
Medical assets
Trustee responsibilities
Loans made to siblings that might not be noted anywhere obvious
Frequent Flier Mile numbers (inheritable!)
Document locations, etc.
The most powerful part however is that it coaches parents how to write an Ethical Will letting your kids learn what your hopes and wishes are for them.
You will create tremendous connectivity by helping make the settling of an estate easier for your clients' families.
Author not affiliated with MFS Investment Management or any of its subsidiaries.

12. COMMUNICATE: ENGAGE AND EDUCATE.
To become an accomplished skier, or pianist, or parent we read books, we practice techniques, we develop competency.
It's the same with developing competency in transferring our wealth successfully to our kids.
This is a list of several terrific resource books for your and your children to help develop financial and family philanthropic competency.
Here are some terrific books to help us teach our children about the importance of a family legacy.
Inspired Philanthropy is a phenomenal resource tool for helping families define their family values, develop a mission statement and learn more about family member passions for different groups or organizations. It offers forms, grids, questionnaires, definitions, websites, common family practices, sample giving plans, conversation starters, family meeting agendas, etc.
The Giving Family is fabulous because it gives us tactical ideas on how to engage our children in philanthropy. It has ideas for 5 year olds (penny drives, book drives, toy drives) and for our adult 50 year old children, we can talk about activities and charities that we want to support as a family.
Authors not affiliated with MFS Investment Management or any of its subsidiaries.

13. COMMUNICATE: ENGAGE AND EDUCATE
Outline a giving plan
Funding areas
- Cultural, Education, Social Programs, Environment etc.
Local vs. Global
Organization
Amount and Percentage
Legacy wishes
Here's another idea. Outline an annual giving plan. This is a great way to connect with the next generation, by getting them involved in the planning and philanthropic process.
Many parents fear that their kids think that when the parents die, they will have "won the lottery". Not a great feeling. So, teach them early that "the money is NOT all about them".
Sit down with your family and FA and go through all of the organizations that you currently give to. Ask your children if there is any group they would like to add to the family's plan. Get them engaged in the Plan by having charities of their own passions in it. Once a year, your family and the FA can have a conversation about how much money should go where, are there any new organizations that you want added or dropped. By example, and by involvement, you teach your children to "be your brothers keeper". You train your children away from thinking it's a lottery prize they are winning. You can do this with children and grandchildren of any age.

14. Successfully transfer wealth: Understand: why transfers fail
FAMILY WEALTH MANAGEMENT
GENERATIONAL WEALTH CONVERSATIONS
Successfully transfer wealth:
Understand: why transfers fail
Plan: to avoid mistakes
Communicate: to engage and educate
Avoid the mistake that so many people make.
Understand the mistakes that other families have made, so as to not repeat them.
Develop your plan for what you want to have happen.
Share your hopes and dreams and plan with your children.
Reaching out to your children and adding clarity to the future is a gift you can give now.
Call to action for each of you:
Create a family map. Review your map with the advisor who invited you here today.
Create (or update) your planning documents with what you need and want to accomplish with your family assets and treasures.
Strategize with your advisor how to begin to or continue to engage your family. Communicate today, and often.

15. Questions? Thank you.
Survey Methodology: MFS, through Research Now, an independent research firm, sponsored an online survey of 1,500 individual investors. MFS was not identified as the sponsor of the survey, which was fielded in October To qualify, respondents had to have a household income of at least $50,000, be invested in mutual funds, and make or share in financial decisions for their household. Gen Y refers to investors ages 23 to 41, Gen X refers to investors ages 42 to 53, Boomer refers to investors ages 54 to 72, and Silent generation refers to investors 73+. These ages are based on calendar year 2018.
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