Throw a lot of money at an already-complicated family situation and the result is often a tangled, multigenerational web of intentions and desires about the purpose of the wealth.
These days, blended families are common and it's no different for the wealthy. In a nationwide survey of 680 U.S. individuals with $3 million or more in investable assets, U.S. Trust found that 46 percent have experienced a change in the family dynamic, whether it was caused by divorce, remarriage and stepchildren or death of a spouse.
Money magnifies family issues
What's different about the wealthy families is the presence of money. While wealth can be used for good --respondents in the survey ranked "giving back to society" as the second-most important use of their wealth after providing for their family -- it can also wreak havoc on family dynamics.
Increased family complexity has led to failure to plan for many unexpected financial events among the wealthy, according to the study. For example, while 59 percent of the respondents have given "substantial financial support" to adults in the immediate or extended family, less than 3 percent have a plan to account for it.
Keith Banks, president of U.S. Trust, said in a release that while complex family dynamics are not unique to wealthy families, money can exacerbate problems, rather than solve them.
"Traditional approaches to wealth management need to evolve and incorporate the diverse perspectives, roles and contemporary needs of the modern family," he said.
When can children be trusted with money?
More than half of those surveyed grew up in middle-class households and 78 percent of them earned their own wealth, rather than inheriting it.
So it's interesting that although they made their own way, they don't appear to have faith in their children's abilities. Most respondents, 96 percent, say their children aren't mature enough to handle money until at least the age of 25.
Only 38 percent of parents have fully disclosed the family financial situation to their adult children, and the same percentage believe their children will be able to manage an inheritance.
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