How to Figure Out if Sharing Assets Still Makes Sense
By Doug Baumoel
In the back of your mind you may be asking this question: Should we continue managing our wealth, business, or philanthropy together at this point, or should we go our separate ways? Many members of families that share assets must face this question at some point, although far too often they wait until a conflict or crisis hits, when they are then forced to face this.
A key challenge with legacy assets is that the group sharing those assets rarely chose to do so with purpose, in contrast to a non-family partnership. Goals and values within the group may be aligned, and they may share great affinity for one another. Or not.
This uncertainty increases the risks of sharing. Yet it is also true that the rewards of being able to share assets and opportunity together as connected family, in a productive and purposeful way, can be extraordinarily meaningful and impactful.
This risk vs. reward context introduces two key questions to examine this topic:
- Does sharing assets enhance or detract from being family?
- Are we still family without shared assets?
Your Legacy: Gift or Curse?
Legacy can give us a powerful sense of membership in a tribe or interfere with personal agendas and create unwanted conflict. Families that share significant assets sometimes feel being “family” brings with it certain expectations and responsibilities: Certain behavior, attendance and participation at events, individual compromise for the sake of the family, and a host of legal and fiduciary responsibilities. Families of true affinity find these complications easier to embrace and help one another navigate through life with them.
But when “family” devolves into being about obligation and frustration over differences, family members may begin to question if it is only their shared assets that unite them as “family.” The benefits of being a “100-year connected family” may seem elusive or not important anymore.
A Practical Test for Family Affinity
Evaluating your family’s level of “family-ness” can provide useful insights to help you productively work with existing differences or determine if it would be better to separate. We call this “family-ness” the “Family Factor,” and you can begin to examine it in your family by asking:
Is our family bond strong enough to leverage compromise, forgiveness, and commitment to change?
This question describes the key elements required for family members to manage conflict. If they can do this well, they’ve got more choices to figure out how to be family together and how to successfully manage shared assets.
The Family Factor framework helps families gauge their family “glue.” When that “glue” is strong, families can derive great benefit from navigating the challenges of shared wealth together. That shared journey can become an opportunity for growth and enrichment.
When that “glue” is weak, clashing over shared assets and competing interests without resolution can erode connections or, even worse, can interfere with what remains of the vision of “family.”
Understanding Family Factor gives clarity to discussions about what boundaries and bridges need to be built for the shared family enterprise to succeed.
Exploring Your Family Factor
To better understand the Family Factor, consider its three components:
- Shared History
- Shared Vision
Does Your Family Have a Distinct and Meaningful Shared History?
Shared history doesn’t even necessarily mean a positive history—it just means shared experience. If your family has a meaningful shared history, you’ll have something to lose if you disband and stop seeing yourselves as a group. When your family can construct a shared narrative that provides meaning and value—even out of difficulty—you can build on shared history, which can lead to finding “family” within.
Does Your Family Have a Shared Vision of Being Family in the Future?
Do family members value identifying as “family” in the future? Or holding shared events? Or when the matriarch or patriarch passes, will your “family-ness” quickly dissolve? If your family sees value in being a connected family in the future, then family members have something to gain by compromising, forgiving, or learning/changing to secure that future.
The challenging work of sharing assets can play a role in strengthening these relationships. This vision of future connectedness is a powerful motivator for working things out to make decisions together.
Do Your Family Members Know Each Other Well? (Trust)
In his work on life stages, Erik Erikson defined “trust” as predictability. A sense of predictability is a key component of trust that factors into our evaluation.
Families can create tough environments—especially when there are shared assets, shared decision-making, and power hierarchies. Interests and values collide and often set individuals against one another. So rather than defining trust as we usually do—as aligned interests or affinity—consider trust simply as predictability.
Through this lens, I know if you are competitive and will relentlessly pursue your goals, I know that even if you “love” me, you will do what you can to “win.” If I know you want something in opposition to what I want, I can trust that you will pursue your interest. Plus, if we both know how our system of engagement works, (i.e., we are financially literate and understand the companies, industries, and legal documents that connect us) we can predict how we each might pursue our goals.
When family members can each anticipate how others will behave in their own decision-making efforts this enables each of you to make decisions for the greater good of the group, beyond your individual self-interest. Predictability enables compromise and selflessness—but it does not ensure it.
Having different interests, values, and concerns is not the enemy of trust. Not knowing someone well is the enemy of trust, because they seem unpredictable.
Finding Value in the Family Bond
When anger, incompatible values, and conflict damage relationships, it’s sometimes difficult to see the value in maintaining a family bond. When family members or branches of the family have significantly different interests and values, made worse by disagreements and distance, it can be easy to assume that splitting up assets and associated family ties is the next logical step.
Reframing the question to the broader or generational question of family vision, and considering the impact of shared history and trust, can often help families see beyond current relationship challenges to figure out if their Family Factor is strong enough to benefit from sharing assets or whether separating assets is what actually protects their vision of family for the future.
A more in-depth version of this piece will appear in the book Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask, edited by Tom McCullough and Keith Whitaker, published by Wiley. The book will be released in December.
The full chapter explores this topic further and covers:
- When Splitting Up Makes Sense
- Separating Efficiently
Continuity Managing Partner Blair Trippe also authored a chapter in the book: How to Manage Conflict in Your Family.
Help your family develop skills to share assets successfully and protect relationships: Conflict Management Training for Families.