Wealth Transfer Is About More Than Just Money

A big multigenerational family walks together in a park. — (Image credit: Getty Images)

Nearly every article on the Great Wealth Transfer discusses how the Silent Generation and Baby Boomers are poised to transfer about $84.4 trillion in assets through 2045, with $72.6 trillion going directly to heirs, according to Cerulli Associates.

But how the ultra-wealthy perceive wealth could have implications for others. Many goods and services, initially exclusive luxuries for the ultra-wealthy — such as electricity, indoor plumbing and refrigeration — are now taken for granted by the broader population. How the ultra-wealthy think about wealth today will shape how the broader world thinks about it tomorrow.

In the book Complete Family Wealth, co-authors James Hughes Jr., Keith Whitaker and Susan Massenzio recount a wise grandmother's words: "Our family has always been rich, and sometimes we've had money." This statement encapsulates a perspective long held in ultra-wealthy circles, now reaching a wider audience. True wealth for an individual, household or family lies in their well-being — a flourishing family unit.

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You might wonder how to apply this concept in your own family. Complete Family Wealth provides a framework, The Five Forms of Family Capital, which we'll modify slightly for a more actionable approach to wealth transfer beyond just money. Additional insights can be gleaned from organizations like the UHNW Institute and ideas such as Wealth 3.0.

Here's a brief explanation of each form of capital, along with economical and generous ways to implement them:

1. Cultural capital (spiritual capital): Reflects the family's shared vision (purpose, values and roles).

Economical: Order pizza, grab some scrap paper and dedicate a Friday night to drafting your personal, household or family vision. TFM defines vision as purpose plus values plus roles. Don’t worry about getting it perfect, just get started.

Generous: Arrange a family retreat with an external facilitator, combining vacation elements with sessions to refine individual, household and family visions.

2. Human capital: Promotes the physical and mental health of family members.

Economical: Take a family walk or hike without phones (except one for emergencies). This is a simple way to enjoy one another’s company and the benefits of exercise.

Generous: Enroll in fitness classes together (yoga, spin, boot camps, kickboxing, etc.). If a family elder can sponsor, even better. This is a fun way to emphasize the value of physical health.

Economical: Start a family book club or movie night, alternating choices among members. It's an opportunity to deepen discussions beyond the usual topics. Books we suggest starting with: Generations by Jean Twenge or The Good Life by Robert Waldinger and Marc Schulz. Movies could be Defending Your Life or Dead Poets Society.

Generous: Virtual family game night with a game-show host. This isn’t as expensive as you’d think, and you can’t beat the convenience of a company like Playful Humans. We’ve found 8 p.m. on a weekday night, planned four to six weeks in advance, as a universally doable time for all life stages.

4. Intellectual capital: Shares the collective knowledge, experiences and wisdom of the family.

Economical: Have someone in your family teach a class about what they know to the rest of the family. This could be Uncle John teaching everyone to hit a golf ball, Aunt Mary teaching about making the world’s best cupcakes or Grandpa Pete teaching everyone to drive a stick shift.

Generous: Create a private family podcast. It has never been easier to record and edit audio and never been cheaper to preserve the audio in a way that it can be used later. All you need is some basic equipment/software, a passionate member of the family to do the interviewing and some willing subjects to be interviewed. Some of the questions we love are around wisdom: What has your life taught you about love, success, happiness, leadership, etc.?

5. Financial capital: Refers to cash, securities, real estate and other traditional assets.

This is a well-trodden path with plenty of complexity. Consult your financial team for tailored advice.

These initiatives all demand time investments. Consider dedicating 30 minutes to an hour a month preparing for your family’s “wealth transfer.” Reflect on the optimal allocation of your time across these capitals.

While most people focus 95% of their effort on financial capital, this alternative framework offers a broader perspective on legacy. What you choose to do with it is entirely in your hands.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Alex Kirby, Founder and CEO of Total Family Management, is a forward-thinking leader based in the Washington, D.C.-Baltimore area. He is a firm believer in the pivotal role that family plays in our lives. Under his guidance, TFM offers private virtual family coaching services and cutting-edge proprietary software designed to enhance family dynamics and social fitness. TFM is utilized by premier family offices, wealth firms and private families across the U.S. Throughout his career, Alex has been unwaveringly committed to people development, highlighting his dedication to empowering both individuals and families.