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www.privateairny.com Private Air | Spring 2020 42 WEALTH MANAGEMENT By: Brian Luster and Steven Abernathy HOW HEIRS BECOME RESPONSIBLE STEWARDS OF WEALTH A family's prosperity may benefit future generations—provided it lasts. History has shown inheritances are unlikely to remain intact without thoughtful stewardship. Heirs are often ill-equipped to handle wealth they had no role in creating, and, they do not have a full appreciation for the responsibilities associated with caring for these assets. Fortunately great stewards can be made, as one need not have been born with great financial acumen, talent, or luck. e four hallmarks of great stewardship are very simple: 1) leadership 2) delegation abilities 3) accountability and 4) great communication. e first responsibility of the steward is twofold: lead a team of multidisciplinary advisors and guide family members to adhere to their advice and decisions. e steward typically acts as the communication "lead" between the team and the family. e team's decisions are intended to serve the interests of and support the family vision. What must a family employ for success? Family governance is first and foremost— and no two families are exactly alike. When families teach heirs to communicate and work together effectively, their incubator for leadership begins. ese early experiences with mentorship and guidance from family members and advisors vary and evolve as heirs grow. What may begin as theoretical eventually will be based on real-world experience and events. is provides grantors and older family members a first- hand look at how the next generation works together. Who are the do-ers, leaders, and problem- solvers? Is there an individual who consistently emerges as the younger generation's go-to person? All of this is worth noting. How heirs' skills develop over time will be shaped by their interests, abilities, and talents. After a lifetime of leadership exercises that began in early childhood, the elder generation will likely have determined a suitable steward. As s/he takes on more responsibility, it is critical for a high- performance team of multi- disciplinary experts, some of whom may be in place already, to work with the emerging family leader(s). e older generation may have established relationships with a team dedicated to managing the family's financial capital including wealth advisors, attorneys, accountants, and others. As the team ages, when a conscious passing of the reins to the next generation occurs, this creates a far better platform for success than a sudden change in family leadership (i.e. illness, death) which does not take into account the learning curve required to successfully assume management of an affluent family's affairs. As the new steward takes additional responsibility, the team of experts may be changed, grown, or reduced depending on the needs of the family. Effective families strive to create high levels of accountability between advisors and the family as well as foster clear communication. e family meeting is likely to be one such in- person forum. Additionally, there may be quarterly conference calls or video chats assembling the team and family members to review objectives and goals related to the family's mission. When heirs are well prepared the results are clear: the family fortune flourishes, and their educational, philanthropic,

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