I Couldn’t Agree More: Wealth Is a Gift, Not an Entitlement

By Trip Holmes

I recently came across an article in Family Business magazine from a fellow professional, J. Kevin Heaton.  Kevin is a wealth manager for family business owners, based out of Columbia, SC. 

In his article, “Wealth Is a Gift, Not an Entitlement,” Kevin discusses a family dynamic I’ve seen all too often in my 35-plus years advising family business owners myself. It’s always sad to see some members invest the same blood, sweat, and tears that mom and/or dad have done through the years, only to see their siblings rewarded equally when it’s time to settle the estate or transition the ownership of the business.

One of the toughest concepts to discuss with some families is the notion of treating your children and other family members equitably versus equally in these matters. As Kevin notes, it’s about economic fairness, and “fairness should depend on who is creating value” in the business.

I really couldn’t agree more with the sentiments Kevin expresses in his article. The more family business owners can impress upon family members that any sort of wealth transfer—be it a stake in the business or cash proceeds from a company sale—are gifts, not entitlements.

As he lays out in the article, and as I have many times in consulting with family entrepreneurs in the middle market, you can instill these values well before the exit. These principles should guide how you let people in your family contribute to the business, what titles and roles they take on, and of course any compensation, be it cash or an equity stake.

The more you plan and execute away from an entitlement mentality among your family members, the better you’ll be able to build your business today and the greater your legacy will be tomorrow.

Please head over to this link on the Family Business website and get the whole story, along with some spectacular strategies, from Kevin Heaton:  https://www.familybusinessmagazine.com/wealth-gift-not-entitlement.