By Valerie Galinskaya and Shilpa Mirchandani

When Merrill clients Carmen and Elijah launched a start-up more than 26 years ago, they never dreamed it would expand globally and achieve extraordinary success. They are now the parents of three young adult children, with their eldest recently expressing interest in joining the business.

While Carmen joined annual reviews with their private wealth advisor and had been involved in a meeting with their trust and estate attorney years back, Elijah had taken the reins on a majority of the financial and legal planning decisions. They had not communicated any details regarding the family's wealth with their children, partially due to a fear of impeding their children's motivations. But when Elijah had a heart attack two years ago, Carmen recognized that there were major gaps in the family's planning and communication.

When they approached us, Elijah still had misgivings regarding sharing information about the family's wealth with their children, but he recognized that they had to start somewhere. Carmen was determined to educate herself and the children, in hopes of stewarding the family and helping prepare them to manage wealth mindfully.

Carmen's experience -- and desire to step into a leadership role within her family -- is emblematic of the Great Wealth Transfer. According to research from Cerulli Associates, $40 trillion will be transferred to widowed women (with $21 trillion of that moving between spouses who are currently considered high net worth, defined as those with $5 million-plus in investible assets) and $47 trillion will be transferred intergenerationally to women in younger generations.

Carmen's experience is also emblematic of the rise of women's involvement in family wealth. For instance, according to the 2023 Bank of America Study of Affluent Philanthropy, 85% of household giving decisions are made or influenced by a woman.

Where our work comes in. At the Merrill Center of Family Wealth, we work with over 350 multigenerational ultrahigh-net-worth families in navigating the intricacies of wealth and we have witnessed firsthand this shift in family roles.

As part of our mission to empower families, and particularly women and rising generation family members, we have hosted programs for the past 19 years focused on sharing actionable insights and fostering peer-to-peer learning. Recently, we hosted a new women's event with approximately 30 women from ultrahigh-net-worth families across the U.S. and Latin America.

Energized by the sessions, multiple participants, including Carmen, followed up to develop family governance processes. The approach we've undertaken with Carmen's family highlights what we view as core best practices:

Clarify intent: Our experience in working with clients, as backed by research, underscores that it is critical to start with the question "Why?" By first taking the time to understand Carmen and Elijah's values and core operating principles, and then gathering the children's input, the family had a clearer understanding of how they defined success. In their case, success meant utilizing the wealth to support and empower family members while making a difference in their community.

Focus on quality of life: Often, families and their advisors focus much of their energy on technical aspects of the family's wealth such as financial and estate planning, failing to consider the qualitative impact. Thus, the idea of "wealth" can sometimes seem nebulous, particularly for rising generation family members.

For example, Carmen and Elijah's eldest son talked about his appreciation for his parents' hard work but acknowledged unease in discussing financial support for grandchildren's education. Meanwhile, their middle daughter expressed feelings of guilt about the family's wealth against the backdrop of her nonprofit job. By helping the family clarify their values, they articulated a purpose for their overall wealth.

Next, based on their existing estate plan, we helped them create categories for their financial assets and guided them in articulating a purpose and guidelines for each of the categories. In sharing that she and Elijah were navigating new ground by engaging in the process, Carmen modeled vulnerability which encouraged her husband and children to be forthright as well. Thus, the family had a greater understanding of their financial wealth and structures, as well as their family values, policies and expectations.

Build skills within the family: While past attempts to encourage their children to build their investing and budgeting knowledge never picked up steam, after the family meeting, the children had more context and understood that it was critical for them to build not only their financial skills but also their wealth skills, including learning about estate planning, trusts and their roles as beneficiaries.

Elijah and Carmen noted their desire to expand their own skills to learn more about decision-making and philanthropy, modeling intellectual curiosity and reframing skill-building as applicable to everyone regardless of age. At the conclusion of their initial family meeting, each family member was inspired to select a learning focus for the next six months, leaning on key resources and working closely with the family's private wealth advisor.

Continue the process: Keeping the momentum going for family meetings and governance development is a key challenge. We believe that the process itself is part of the product as family members learn to communicate with each other and practice making decisions, including addressing disagreements and navigating change.

One of the most critical ingredients to effective family governance is perhaps the most basic -- family members who are committed to showing up and doing the work together. From that standpoint, Carmen has been a pivotal leader in her family in driving the process. She engaged with key stakeholders, including their private wealth advisor, attorney and CPA, and inspired the rest of her family. Tellingly, their middle daughter volunteered as the point person for helping organize the next family meeting.

Given the vast wealth that will be transferred to women and the rising generation in the coming decades, it is imperative for women's voices to be included in planning discussions that address both the quantitative and qualitative impact of wealth on the family. By introducing these concepts and engaging their families in family governance processes, women can serve as leaders in their families.

Valerie Galinskaya is head of the Merrill Center for Family Wealth where she works with ultrahigh-net-worth families to empower them to be purposeful about the impact of their wealth. She also worked at the Boston Consulting Group $(BCG)$ in New York. She earned her MBA from Harvard Business School and holds a Bachelor of Science, magna cum laude, in marketing and finance from New York University's Undergraduate Stern School of Business.

Shilpa Mirchandani is a director at the Merrill Center for Family Wealth. A former tax attorney, she was a wealth planning strategist at Wells Fargo. Shilpa earned her Juris Doctor and Masters of Law in Taxation from University of Florida, and her bachelor's degree from University of Central Florida.

Valerie and Shilpa do not provide legal, tax, or accounting advice in their roles with Merrill.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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March 10, 2025 13:10 ET (17:10 GMT)

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