One question that stays with me longest after a client meeting is the following: Does this family understand what it believes about its money, and does every member understand the same thing?
I asked a version of that question during a planning review with a business owner I had worked with for several years. He was thoughtful, financially sophisticated and had done serious estate planning work. When I asked what he wanted his adult children to understand about the wealth they would eventually inherit, he went quiet and then said: “I assume they already know. We built this together, in a way.”
They did not already know. When I met with his children separately, they held three different and largely incompatible understandings of what the family business represented, what obligations came with owning it and what their father expected of them. The estate plan was thorough, but the shared framework was not there.
That situation is not a failure of planning, but it is a governance gap.
What Governance Means
Family governance is the set of agreements, structures and habits that guide how a family makes decisions, resolves conflict, communicates across generations and connects its financial resources to its stated values. It is not a compliance exercise. It is the infrastructure that allows families to function with intention rather than by default, and to do so across transitions that would otherwise expose every unresolved assumption the family has been carrying.
Goldman Sachs, in describing what its highest-functioning multigenerational clients have in common, points consistently to three factors: “strong governance, flexibility to meet the needs of an extended family, and continuity” across generations. Bessemer Trust frames effective governance as requiring clearly defined roles, alignment with family values, structured but adaptable decision-making processes and a commitment to review as circumstances evolve.
The Scale of What is at Stake
Cerulli Associates projects that approximately $124 trillion in wealth will change hands through 2048, representing the largest intergenerational transfer of assets in recorded history. Roughly half will come from high-net-worth and ultra-high-net-worth households, representing just 2% of American families.
Roy Williams and Vic Preisser, in their landmark study of more than 3,250 wealth-transitioning families over two decades, found that the leading cause of failed wealth transfers was not poor investment decisions or inadequate legal planning. In roughly 60% of cases, the primary driver was “the breakdown of trust and communication within the family” itself.
The 2024 Bank of America Private Bank Study of Wealthy Americans, which surveyed 1,007 high-net-worth respondents, found that wealth conversations did not begin, on average, until children were 31 years old. One in five respondents had experienced strain related to an inheritance, with interpersonal family dynamics cited as the primary cause by 59% of those who had.
Every Family Already Has a System
Every family operates according to some governance system, whether or not anyone has named it. That system is present in who gets consulted before a major decision, whose opinion carries the most weight and why, and what money is understood to mean within the family.
In most families, these norms are never made explicit. This works tolerably well when a family is small and operating within a common frame of reference. It tends to break down as wealth becomes more significant, a business enters the picture or a founding generation transitions out. The work of family governance is, at its core, the work of making the implicit explicit.
The Foundation: Shared Values Before Shared Documents
The families that navigate complexity most effectively are not necessarily those with the most sophisticated legal structures. They are the ones who articulate, in plain language, what they believe about wealth, what obligations it carries and what they want it to accomplish across generations.
I worked with one family for nearly two years before their patriarch died. When he died, his four adult children disagreed on many things. But they did not disagree on the fundamentals. The estate planning documents told them what they owned. The governance work told them who they were.
Structure and Communication
Once a family has clarity on values, the question becomes structural: How will decisions be made, who has a voice and what process exists for resolving disagreements?
For larger or multigenerational families, more formal structure is warranted. A common architecture includes a family assembly, a family council for detailed decision-making and working committees around specific areas. Goldman Sachs emphasizes a communications framework with clearly defined benchmarks and deliberate strategies for engaging younger generations.
Structure protects relationships by establishing expectations before they are needed. Wealth psychology research, reflected in Goldman Sachs’s client education work with wealth coach Joel Treisman, identifies money as the “elephant in the room” in many families: present, consequential and never quite named. According to Cerulli Associates, 81% of high-net-worth advisory practices identify family meetings and regular communication as the most effective wealth transfer planning strategy available.
Where to Begin
The starting point is a specific conversation: What two or three principles should govern this family’s financial decisions? Have each member answer individually in writing before sharing with the group. Whatever framework emerges should be treated as a living document, reviewed at minimum every three to five years and following any significant transition.
The families that hold together across generations have a clear account of who they are beyond what they own. They have processes for making decisions that do not depend on any single person’s authority or memory.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. The information provided here is for informational purposes only and is not investment, tax, or legal advice. Individuals should consult qualified professionals regarding their specific circumstances.
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