When you need someone for a job, you put out a search and find the best employee. But in family planning, we are delivering the assets to designated…
When you need someone for a job, you put out a search and find the best employee. But in family planning, we are delivering the assets to designated people. Do they have the skills for the job?
Understanding Assets Changes Results. Knowledge and Skills Matter.
We do not fully appreciate the knowledge gap between the person who assembled the portfolio and the people who inherit it.
The original owner understood why each asset was purchased, what the investment thesis was, who the key people were, and what the exit strategy looked like. The next generation inherits a set of legal documents, fund statements, and K-1s, along with a set of relationships they have never cultivated and a set of investment decisions they did not make.
The next generation often cannot effectively evaluate its options. They do not know whether to hold or sell. They do not know whether the valuation they are being offered is fair. They do not know who to trust among the advisors who were loyal to their parent but may have their own interests in the outcome.
They are, in a very real sense, playing a game whose rules they were never taught - and playing it at the worst possible moment.
The problem runs deeper than inexperience. What the next generation lacks is not always a general financial education - it is specific training in the actual assets they are about to own.
What does it mean to be a human being who owns these particular assets? What are the actual obligations - the lawyers, the CPAs, the insurance professionals, the tax filings, the K-1s, the capital calls, the partner relations - that come with this specific portfolio?
Most families spend years educating children on how to be productive members of society. Few spend time educating them on how to be the owner of a leveraged real estate portfolio in seven states, or a passive partner in a fifteen-year-old private equity fund.
The knowledge gap is difficult to solve - families do not know how to educate the next generation, and the next generation does not know what it will need to know. Everyone learns when they live it.
Closely held businesses can reflect the height of complexity. A business is not an investment - it is a living system, with employees, banking relationships, and customers loyal to the person who built it.
Business succession goes wrong with regularity even when families work hard at it. It goes wrong almost universally when they do not.
Part of Wealth Machine, a Secret Art of Planning series.
I’ll be discussing these ideas at the upcoming Notre Dame Tax & Estate Planning Institute, October 28–30, 2026.
Register for the conference to attend my presentation and the other sessions.
https://lnkd.in/ehEjXur5
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