Battles over aging parents and their family fortunes are becoming more common, and some wealthy families are now requiring cognitive assessments for those leading family businesses. Wealth advisors and attorneys say the trend reflects a broader failure to plan ahead.
According to CNBC, while many families focus on the tax or financial components of wealth transfers, fewer are addressing the question of when an aging parent should give up control. Waiting until cognitive decline is obvious can leave families scrambling.
"Look, most of the matriarchs and patriarchs who create family wealth are strong personalities, right?" said trust and probate attorney Scott Rahn. "They've done great things, they've created this wealth, they've created dynasties. Now you're coming face to face with the reality that despite all of their accomplishments, they're human. That can just be emotionally difficult for families."
Rahn said delaying a transition can carry a steep financial and legal cost. His law firm, RMO LLP, specializes in inheritance disputes among ultrawealthy families. He said these conflicts have grown more common as families accumulate more wealth and people live longer, increasing the chances that a family member will develop conditions like Alzheimer's disease.
Family businesses can build in legal safeguards, such as mandatory retirement ages or mental capacity evaluations. But Rahn said how families talk about succession matters as much as the legal language itself. "Whatever that mandatory retirement clause may be, it has to be part of a fulsome discussion around family wealth — what it means culturally to the family," he said.
Advisors say the most important step is starting the conversation early. Mallory Findley, head of family dynamics and financial education at Rockefeller Capital Management, said the biggest mistake families make is waiting for a crisis like a stroke or a major disagreement before discussing succession. By then, she said, emotions are high and trust is sometimes already broken.
"The better approach is to begin while everyone is capable of participating really thoughtfully — as we like to say — while they're happy and healthy and here," Findley said.
She added that meaningful life events, such as selling the family business or the birth of a new family member, create natural moments to revisit future plans.
BJ Goergen Maloney, global head of J.P. Morgan Private Advisory, said that families who don't talk regularly find it much harder to have difficult conversations when they become necessary. "If you don't have a cadence of talking about things, even if it's a couple of times a year, it's really hard to have those conversations," she said.
Maloney said families can build what she calls muscle memory through casual gatherings, making it easier to address harder topics when the time comes.
