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When I ask wealthy people I know (clients; friends; TIGER 21 members) what they worry about financially, I get the usual answers: their business, the economy, the stock market, interest rates, and so on.

But when the conversation opens up and goes deeper, they eventually come around to tell me what really keeps them awake at night: the kids. Specifically, whether it's possible to transfer significant wealth to the next generation without causing permanent rifts between family members, or ruining their kids' values, drive, and work ethic.

Recently I had the pleasure to speak to Franco Lombardo, a colleague who works with high-net-worth (HNW) families and business owners. He's just written a book that attempts to answer this very question, The Great White Elephant: Why Rich Kids Hate Their Parents.

When I read the subtitle, I admit that I wasn't a fan of the word 'hate'. Franco agreed that he included that word to capture the reader's attention, and if that was the case, it certainly worked for me. Wealth, family, fairness, etc. are all 'touchy' topics which can certainly elicit some positive as well as very negative responses; here, I can see the potentially negative aspects that he refers to.

Lombardo believes that something is seriously wrong with the way many HNW families approach the process of estate and succession planning.

"There's something missing in the process when there's a 70 per cent failure ratio from first to second generation wealth transfers," he told me. "You have the best legal minds, accounting professionals, wealth managers, investment and insurance specialists, and the wealthiest families, and you still have these results. So my question is, what's missing?"

Excellent question. Lombardo's answer: family issues are sabotaging the planning process.

"Under the table in most families resides a great white elephant—the unresolved, the 'undiscussable' issues, the skeletons in the closet—that the family wants to avoid, because they don't want to deal with them, or they're too painful," he said. "I don't care how powerful the top-of-the-table planning is, unless that elephant is addressed, it will topple the table."

Lombardo's metaphor is an insightful one. In my experience, it's difficult to separate the financial issues and the emotional issues of wealth transfer. And the more you try to, the less chance of either the family or the wealth coming out intact on the other side. They need to be integrated, not separated.

The consequences of such failure can be severe. For the family, obviously, but also for Canadian society as a whole. I'm sure there are some who delight in "riches to rags" stories of wealthy families cracking up—the 1 per cent getting their just desserts. I don't see it that way. When I think of estate planning failures, I think of family businesses going bankrupt. I think of people losing their jobs. I think of long term opportunities—for business and for charity—being squandered not to mention the broken family relationships that often result.

Lombardo's audience is HNW individuals and their advisors. But estate planning is by no means exclusive to the wealthy. Whether you have $40,000, $400,000 or $4-million to pass on, you want to do it in a healthy, equitable way that strengthens the family rather than tears it apart. Here are three tips that can help you do that.

Know what you stand for
Families need to be clear about their wealth values: what exactly is it about wealth that matters to you, and what doesn't? Is the family business a treasure to cherish through the generations? Or is it simply a vehicle to provide jobs and/or dividends? Is wealth a way to provide a high quality of life for family members? Or a way to make a positive impact on important causes?

It's not enough to speak about these values, or to keep them to the adults in the family. You need to live them, in full view of your children. This is the foundation of respect between generations. It is also the foundation of respect for wealth itself.

Teach the kids emotional financial literacy
I completely agree with Lombardo on this one: I've seen too many wealthy parents teach kids the nuts and bolts of finances without teaching them anything about the emotional challenges that often accompany great wealth.

How to save, how to invest, how to read a balance sheet, manage a business, etc.—such information is a critical part of any young person's education. But what about the "soft skills"? What's it actually like to be wealthy? How do you deal with the isolation and loneliness great wealth can sometimes bring? How you stay true to your values in the midst of material abundance?

These are the things/important skills that you can't get from reading an annual report or an accounting textbook. Yet without them, kids inherit wealth without inheriting the skills to cope with it.

Deal with the white elephant(s)
This is Lombardo's central point. You might think you can separate wealth issues and family issues, but in reality, they are inter-connected. If there are unresolved issues of entitlement, guilt, favoritism, neglect, sibling rivalry, etc. in the family, they have the power to destroy the wealth and the legacy you've built. Pretending otherwise is folly.

Thankfully, there are resources for families going through such challenges. I know of several business counselors who specialize in helping family members navigate the emotional and financial responsibilities of estate/succession planning (most are family business owners themselves, so there's an added insight to their suggestions). In addition, many business schools and universities are starting to offer courses and seminars in dealing with the topic.

Thane Stenner is founder of Stenner Investment Partners within Richardson GMP Ltd., as well as portfolio manager and director, wealth management. Thane is also Managing Director for TIGER 21 Canada. He is the bestselling author of ´True Wealth: an expert guide for high-net-worth individuals (and their advisors)'. ( ( The opinions expressed in this article are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. Richardson GMP Limited, Member Canadian Investor Protection Fund.