Keys to keeping an estate great: Education, teamwork

By Dian Vujovich
Special to the Daily News

Tom Rogerson knows quite a bit about the transferring of wealth within a family and about how even the best-laid estate plans can go horribly awry.

Charles Rogerson, Tom's great-grandfather, was a skilled banker who built Boston Safe Deposit and Trust into one of that city's largest financial institutions in the early 20th century. He retired a very wealthy man who had designed an estate plan that, he hoped, would efficiently transfer the bulk of his money to family members after his death.

Unfortunately, things didn't go as planned.

"I'm his great-grandson, and it (the money) is gone," says Rogerson, senior managing director and family wealth strategist at Wilmington Trust. "But it's gone not because of bad tax planning or bad investment management; he owned an investment-management company. It's gone because of how the family operated."

Funny thing about families: Wealthy or not, each one has its own unique modus operandi. More often than not, that MO includes one decision-maker -- which is precisely where the family wealth-management problems can begin.

"My great-grandfather made all the decisions about the family wealth until the day he died," says Rogerson, who was in Palm Beach recently to address a Wilmington Trust audience. "He did a great job of it, like a lot of people in Palm Beach are doing. The problem was, the next generation never made a decision together until he was gone."

That lack of family communication about the family's fortune is the core reason a family's wealth doesn't endure.

Sobering statistics

According to data from recent studies, 60 percent of families fail at preserving their wealth because of a lack of communication and trust within the family about decision-making.

Twenty-five percent said it was due to unprepared heirs. Only 3 percent fail to preserve their wealth due to poor planning and investing.

Rogerson believes the best way to increase the odds of preserving a family's wealth -- and thus passing it from generation to generation -- is through education and teamwork. Utilizing the strengths and weaknesses that each family member brings to the table is what, he said, builds confidence and trust among family members.

Speaking at a Tiger 21 conference, he heard members of that elite group referring to themselves as "immigrants to wealth." That's because many grew up with working- and middle-class values and, although they acquired great wealth, know little about how to prepare their children for an environment that is vastly different from the one in which they grew up.

One member at that meeting told Rogerson, "I prepared the road for my children. I didn't prepare my children for the road."

To help families of wealth with this all-too-common plight, Rogerson has created "The Home Team Advantage: Successfully Preparing Your Family for the Future."

Five-step plan

Here's an overview of each step:

Step 1: Family education. Although there are few if any college courses titled How to Be a Better Beneficiary, or How to Get Your Intended to Sign a Prenup and Like It, Rogerson said that family education needs to focus on the real issues that the family faces. Then, hear what each member of the family has to say about those issues.

Doing so creates a family team environment in which members aren't being told what to do or think. They become involved because they are respected for their individual points of view.

Step 2: Family communication. It's not the issues at hand that cause most family disagreements, but how the information is presented. To teach people how to become better communicators, Rogerson introduces clients to a communication text that breaks down, into four quadrants, the ways each of us communicates: persuaders, counselors, analyzers and directors.

"Persuaders are impulsive and make decisions quickly," he says. "Analyzers are the opposite. The moment a persuader starts talking, an analyzer starts getting annoyed."

Taking the time to learn about the various ways members of a family communicate -- and then accepting those differences -- is a vital part of team-building, whether you're managing a multinational company ... or your family.

Step 3: Shared family experiences/values. Rogerson uses a values exercise that points out where the individual values in the family are shared, where they overlap and/or where they are completely independent. The goal is to find where a family's general interests lie.

Step 4: Group decision-making: philanthropy. Family philanthropy is a great way for a family to begin making group decisions and to satisfy the individual desires of all members -- at the same time.

"If one family member wants to give to a conservative cause and another to a more liberal cause, the brouhaha is on," says Rogerson. "But if we lead them to recognize that they might disagree on politics and agree on education, the family can do its 'together philanthropy' on the things they agree with. They can do their separate philanthropic giving in the areas they prefer."

Step 5: Family governance: the home team. Creating a home-team advantage begins with families making group decisions on small issues and then moving on to the bigger ones.

For example, why not have your family members decide where they would like to vacation this year, and then have each one participate in planning that holiday?

Rogerson did so with his six-member family. He gave them a budget but nothing else. The result? "We didn't take our kids on this vacation -- they took us. They made all the decisions, and we learned a lot about each other."

Plus, they had a great time.

Now that's teamwork.