Wealthfare™

Overview

Wealthfare™ is a financial condition whereby an individual’s financial well-being is dependent upon the wealth generated by previous generations. While many wealthy families have documents in place to transfer wealth to the next generation, they do not focus upon properly preparing their heirs to be responsible recipients and stewards of the family’s wealth

We have observed that the subsidy of a trust fund may produce an effect in which the heir lacks incentive to produce wealth or maintain a sustainable lifestyle. This leads to the depletion of family resources, and a potential divergence in family values. A proper wealth transfer plan will help reduce the prospect of future generations living on Wealthfare™.

Our Experience

We have personally experienced and observed the mismanagement of generational wealth transitions under many different circumstances. We have seen:

• Family members expecting a monthly check in perpetuity produced from the wealth generated by previous generations with no questions or responsibilities attached.
• Distribution levels from trusts that are not based upon the performance level of principal. Fees can eat away at a reasonable rate of return and cause principal to be reduced substantially.
• The one common thread: is the lack of transparency and communication.

Our Process

1. Identify the family goals. This stage encompasses data gathering on a number of levels. We will collect the traditional inputs needed to put together an effective plan. Our approach also takes into consideration some unique aspects of transitioning family wealth. For example, we identify the individuals who will be the contributors to future wealth, the leaders and stewards of the existing family wealth and those who will be detractors from this goal. Interestingly, the most challenging individuals may be a part of the generation transferring the wealth.
2. Formalize a Plan. We provide the investment management and strategic planning expertise to formulate a plan for successful generational transition. Our plans include following elements:
   • Preparation of the transferring generation to release information and control of the family assets.
   • Empowerment of the recipients with knowledge and the ability and resources to act upon it.
   • The coordination of written agreements and processes requiring collective agreement of all parties to move to the next phase.
   • Agreement amongst all parties who will take a leadership role, who are the future contributors to family and generational wealth and who would be participants in receiving resources without being contributors to the wealth.
   • Agreement upon the amount of resources that would be withdrawn commensurate to contribution and or lifestyle.
   • Creating a higher awareness as to resources, withdrawals, tax resources & strategies.
3. Implementation. We then execute on the knowledge transfer process using the written plan as a basis to develop investment strategies that include the intergenerational participants.This is a feature of our tiered approach to empowering people within their knowledge base. There are both advanced adopters and resistant adopters in every project implementation. Including and empowering the resistant participants breaks down their barriers and allows them to see the benefit of the planning process to their own personal well-being. Ideally, they would understand, if not comply with, the need to think about the good of the whole family and not just their own needs. We undertake strategic investment analysis of all family assets in order to seek to maximize and conserve value. Investment strategies are tailored to the growth and withdrawal needs of the family, taking into consideration unique tax issues, possible capital needs and short-term and long-term investment strategies and the short-term and long-term impacts to the withdrawals to the asset base.
4. Monitoring. We employ a system of accountability applied on an on-going basis as evidenced by:
   • A regular review of investment strategies to be sure they are meeting the needs of the family.
   • A monitoring of and adjustments to changes in family dynamics, economic conditions and family conditions.
   • Changes in public policy or tax treatment of various entities or asset classes.
   • Monitoring of adherence to agreements for all the family members.
   • The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor before implementing a plan.

Disclosures

Investment advice offered through Shepherd Financial Partners, LLC, a registered investment advisor. Securities offered through LPL Financial, member FINRA/SIPC. Shepherd Financial Partners and LPL Financial are separate entities.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the techniques and strategies discussed are suitable for all individuals or will yield positive outcomes. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor before implementing a plan.

Tracking #: 1-592232