Opportunities and Risks in Asset Ownership Between Generations

For most, asset ownership is an important part of their long-term financial plan, and likely one of the biggest financial decisions an individual or family will make. Equally important decisions come when a family is ready to transfer those assets on to the next generation. As such, it’s crucial that there is a full understanding of what that means not only for the purchaser or investor, but also for their families and generations to come. With the appropriate preparation, property ownership will enhance family wealth, and ensure continued success for generations to come.

Property Ownership

Owning property – whether a home or a family cottage – is a major opportunity to expand a family’s legacy, but with this type of asset ownership comes added responsibility. Firstly, there are the demands of maintenance and running costs. It’s important to be prepared for the unexpected costs that will come up in order to ensure the longevity of the investment. Additionally, if the property is intended to be passed on to future generations, considerations surrounding its future inhabitants should be taken into account. How does it integrate into the community at large? What is the future of that neighbourhood or district? Would you be happy to see your grandchildren growing up there? Building this knowledge and expertise will allow you to enhance the outcomes of these properties, and make the most of your investments.

Business Assets

Many of our clients also have us help them manage the transfer of commercial assets, and with that comes another set of challenges and responsibilities. In addition to the considerations that must be made during the transfer of property such as a family home, there are other, more complex, responsibilities that should be considered when other non-family parties and entities are involved. As one generation becomes ready to transfer those assets, the upcoming generation must be prepared to take on the duties that come with owning assets such as a commercial building. Tenants, management companies, and community members will be looking to the new generation to maintain the leadership and values of their predecessors. Furthermore, there is more hands-on management, risk, and volatility involved in commercial property ownership, for which the new owners must be primed and equipped for.

As illustrated by the previous two examples, there are responsibilities that must be embraced by both the current and successive generations in order to ensure the smooth intergenerational transfer of assets. Navigating these discussions and related planning are where our Legacy Family Office team comes in. Our team can not only provide essential services, such as estate and wealth planning, but we can also give you the tools to raise good inheritors that will build upon your family’s legacy. Contact us if your family is thinking about generational transfers and the associated responsibilities.