|
Your wealth and your children are but a trial, and Allah has with Him a great reward. -Quran, 64:13 A “phenomena” cited by Forbes magazine recently cited a study by “the Williams group” found that 70% of intergenerational wealth transfers fail. This is from a study of 3250 families who transferred wealth over that time. What does “failure” mean? Well it’s not exactly clear. They stated the obvious; wealth becomes a source of friction among the next generation. The source of this study is an organization that offers a service for high net worth families to counsel the next generation in preparation for the great responsibility of taking on wealth. They indicated that they studied 3250 families and the 30% that were “successful” did a number of specific things such as “ identify a family mission” and develop and implement a “strategy.” According to this article, “none” of the 2275 families where a wealth transfer “failed” “identified a family mission” or developed a “strategy.” This is despite their having financial advisors and attorneys and actually had plans in place, so the estates were not ravaged by taxes or bad investments. In contrast, every single one of the 975 families that had “successful” wealth transfers did these things. Of course, the terms “family mission” and especially “strategy” are vague terms that serve as excellent fodder for collecting consulting fees. A large “everybody here did exactly this” and “everybody there failed to do exactly this” should elicit some skepticism, particularly since the data is not available and this seems like fluff marketing for rich people. This group is supposed to have a book out, from what I can tell, it’s more along the lines of promoting a service rather than telling us more about the data involved. This was not an academic study. One thing that I do wonder about, as an estate planner, is why a family needs and “mission statement” and the strategy concerning wealth transfer in the first place. By this I don’t mean is not worthwhile to have a mission and the strategy focused on the family itself, keeping the family together, making sure there is peace and harmony amongst family members are all valuable things. I would hope you don’t need a consultant to help you keep your family from tearing itself apart after you die, but if it works for you, go for it. Keeping all the wealth together, keeping a “legacy” of a family business that will stay on generation after generation is a fools errand. We know that we are mortal, but somehow, many of us seem to think that our wealth should be immortal and in this sense, that wealth will give us our immortality. Under the Islamic rules of inheritance, which are mandatory for all Muslims, how property is to be distributed has already been decided. You need not worry about that, just implement it. You can give up to one third to a beneficial cause such as charity if you want to but that’s about it. The idea that you must “teach” the next generation about what your family’s particular goals are with respect to the business and philanthropy and tethering future generations to this “vision” may sound nice, but tends to be vainglorious -an effort to control assets from the grave. Yes, it is valuable to give charity, including continuous charity that will benefit humanity long after you die. These can be done in a matter that glorify you and your family if that is what you are about. I do hope for most Muslims, the intent is more genuine and less about vanity. No matter where you put your wealth, no matter how it’s distributed or what your “mission statement” or “strategy” is, your wealth will disappear, 100% of the time. Any monuments that you create and any documents stamped “mission statement” you draft, will be worthless someday. It is not just individuals who are transitory, so are our possessions. It is certainly true that family members often do not get along. You probably did not need to read a study to figure that out. It is also true that after the death of an individual, children frequently go straight to battle stations. Whoever is responsible for distribution of the assets can easily be regarded as the enemy by everybody else, or the family can be split into two or more pieces. The scars that come with the friction between family members after the death of an individual can indeed be debilitating. The advantage of doing things based on the Islamic rules of inheritance is that a uniform system mandated by Allah distributes the inheritance. You distribute it correctly, there is nobody to be angry with. Petty jealousies, personal vanity in-law and sibling rivalries are merely irritating, not destructive. It encourages greater family harmony. Many of the issues that come about during wealth transfer, including jealousies, sibling rivalries, manipulation of parents by children or daughter-in-law’s and son-in-law’s, disfavor of some children over others all disappears. For Muslims, the “mission” is laid out in the Quran. You don’t need your own strategy or a mission, just practice your religion and do the right thing. If you are looking for information on islamic will Kindly visit Islamicinheritance.com. They also have information on wasiyyah and al-wasiyyah
Related Articles -
islamic will, al-wasiyyah,
| 
