I’ve written several blogs on the theme of estate planning and specifically the difference between wealthy individuals and wealthy families.
There is nothing wrong with wealthy individuals (new money) – either by luck or skill they have managed to amass their fortune and have every right to enjoy it to the full. Estate Planning is not about them, but about what happens after, once the wealthy individual has died. A wealthy individual will hold on to everything until their last breath. ‘It’s theirs, they earned it and they don’t care what happens once they are gone – why should they pass it on?’
Wealthy families (old money) have a different perspective. From the cradle they are taught that they are simply custodians of the family fortune. Their job is to do their best to enhance the fortune during their lifetime, but whatever they do, at least seven years before they die they must pass it on to the next generation.
Effective estate planning over a number of generations allows whole families to prosper over the long term while the fortune of a wealthy individual is rapidly returned to the state through taxes.
The difference between the two is a sense of ‘duty’. The wealthy individual is loyal only to themselves while the custodian of family wealth feels a duty to the family weighing heavy on their conscience.