having a well-formulated succession plan is essential. 
by russ alan prince
your $5 million high-net-worth practice
a family dynasty is defined as a cohesive economic entity where the perpetuation of family wealth, values and objectives lasts for five or more generations. about 60 percent of ultrawealthy families (net worth = us $30 million or more) are strongly attracted to the concept of a family dynasty.
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the interest in creating a family dynasty is strongest among ultrawealthy families with single-family offices. nearly three-quarters of them think along these lines, according to senior management at these single-family offices. percentagewise, the founders of the single-family offices find the prospect of a family dynasty more appealing. at the same time, two out of five c-level ultrawealthy business owners are very interested in potentially creating a family dynasty. in these cases, more inheritors than founders find the idea of a family dynasty appealing. as the research is based on a worldwide sample, it is evident that the appeal of family dynasties is extensive and widespread.
the appeal of a family dynasty
| generation | single-family office | family business | weighted average |
| founders | 76.4% | 32.1% | 64.9% |
| inheritors | 69.9% | 49.1% | 58.7% |
| weighted average | 74.5% | 43.3% | 61.8% |
n = 403 family enterprise respondents
source: family fortunes: how family enterprises thrive across generations
it is important to keep in mind that in family dynasties, ultrawealthy families share more than financial interests across generations; they also share values and goals. these shared moral standards and objectives give family members a solid ongoing commitment to the family. for a family dynasty to exist, each generation must transfer the family fortune in one form or another, along with their core belief system, to subsequent generations. having a well-formulated succession plan is essential to achieving both of these aims.
for family dynasties to be conceptualized and actualized, the ultrawealthy must rely on the expertise of professionals. accountants are regularly among the professionals they turn to for guidance. many times, accountants are the primary professionals as they have solid relationships with the ultrawealthy because they are providing expertise to their businesses.
“probably the most critical decision ultrawealthy families have to make if they want to create a family dynasty is selecting the appropriate professionals.” – anthony glomski
transferring wealth
according to homer smith, managing founder of konvergent wealth partners, and co-author of “optimizing the financial lives of clients: harness the power of an accounting firm’s elite wealth management practice,” “a major problem with creating a family dynasty is the ability to maintain or increase the family’s buying power across generations. as most families grow in size and establish multiple branches, the amount of wealth required can escalate exponentially. wealthy families who are thinking generationally first have to understand what it is going to take to ensure the level of wealth they want for their heirs and their heirs of heirs. producing some – admittedly rudimentary – projections is generally very helpful. only then can accountants focus on developing the best solutions including the optimal ways they can potentially mitigate current and future taxes.”
without question, one of the major obstacles to creating family dynasties is inheritance taxes. while an obstacle, it is often surmountable. to transfer wealth across multiple generations, accountants have to think creatively. for example, depending on the jurisdictions involved and the time available for implementation, there are more or fewer tools available.
transferring values
as noted, family dynasties are more than just transferring wealth. they are also about transferring values. families can use many tools to help them transfer their values to future generations. examples of these include family meetings, vision and mission statements, family constitutions and family banks. what often proves very effective is – if the family is philanthropic – setting up a private foundation.
private foundations can be instrumental in helping ultrawealthy families stay together and aligned while benefiting others. aside from being great charitable vehicles, private foundations can be used to help ensure the family stays and works together to make a difference. what is usually essential is for the ultrawealthy family to be clear about their charitable goals and how they will be able to continue doing good generation after generation. this usually involves bringing family members into the giving process early and providing the resources – including educational resources – to help them grow as people and as philanthropists.
leading the right team
“probably the most critical decision ultrawealthy families have to make if they want to create a family dynasty is selecting the appropriate professionals,” says anthony glomski, principal and founder of ag asset advisory family office, and co-author of “your $5 million high-net-worth practice: guidelines for sourcing and working with the wealthy during the covid-19 crisis and beyond.” “all too often, the ultrawealthy, as well as a great many successful entrepreneurs and leading visionaries, end up satisfying instead of maximizing when it comes to the professionals they engage. the difference is astronomical outcomes when the right professionals are used as opposed to those who are second-rate.”
it is common for the ultrawealthy to turn to their accountants to ensure they have the right team. it is therefore the responsibility of the accountants to ensure that the appropriate specialists are involved and that the process is effectively managed. knowing what to do and having experience with establishing a family dynasty are crucial. from helping the ultrawealthy family to mitigate taxes on selling company assets to how to most cleverly use private placement life insurance or other strategies to helping the ultrawealthy structure their domestic and international holdings can make all the difference. it is up to the accountants to bring the best specialists together and drive the process.