How wealth can be successfully managed over generations

The preservation of family legacies should be based on trust and shared values

A business that is the source of a family’s wealth and income often becomes more diversified through generations. Getty

In speaking to families, the topic of managing legacy inevitably arises – normally from parents or grandparents, but also occasionally from the children who are mindful of expectations that come with the privilege of belonging to an entrepreneurial family.

Dubai’s vibrancy as a hub for family businesses is underpinned by family enterprises, which have grown into multibillion-dollar companies over the past few decades.

This raises questions of governance, transitioning leadership and the preservation of family legacies. These are very meaningful topics to our family.

In the more than 900-year history of the Princely House, our family has faced questions many times of how to uphold shared values over generations, or how wealth can be successfully managed over generations.

In our family, values are key: These are rooted in our faith, which has been part of our tradition for centuries.

Our family’s House Law states that this should serve as a guide for family decisions. This manifests itself, for example, in our family’s principle that wealth alone isn’t a purpose: it comes with social responsibility.

LGT Group annually allocates 10 per cent of dividends to philanthropic activities, and our company views society and people as a key pillar of sustainability.

Nurturing our values for generations is a challenge. The Princely Family is made up of more than 140 members and the younger generation, in particular, has spread throughout Europe and beyond.

While this is favourable for gaining valuable experience and broadening one’s horizon, it makes cohesion more challenging than when most of our family resided in the same place.

I have fond memories of frequently seeing cousins while growing up. But how can we build up trust and identify shared values if we don’t spend quality time with our extended family?

Both the size of our family and the increasingly international character make it essential to actively support unity.

We meet up and get to know one another, but also to simply have a good time together. Notwithstanding the indispensable tools to communicate, we do this through family days and different gatherings.

By sharing traditions and values in the immediate as well as extended family, bonds are forged and family values are upheld.

My parents exemplified these for myself and my sisters when we were growing up. My wife and I try to pass on those values to our son in the same way.

Often, the business that is the source of a family’s wealth and income becomes more diversified through generations.

Generations may have different views, which may lead to conflicts. Every family should address a few fundamental questions to find common ground.

What stake should family members have in income generated from the family business? Should the family business be deployed to pursue other objectives, such as philanthropy? What is the appropriate legal structure for assets? How are the assets to be invested, and by whom?

In our family, there are informal principles that aren’t explicitly laid out as well as practical, hands-on methods to this.

I find it important to listen to the next generation, but if they ask for advice, one piece I am always ready to give is, try to stand on your own two feet.

Get experience outside the family firm – it boosts one’s standing as well as one’s confidence.

And put a lot of thought into what role or roles you might take in a family business context to acquire an appropriate skillset to do so beforehand.

The DIFC has built a legislative framework to assist families in establishing structures for their succession planning. Chris Whiteoak / The National

The principle of personal responsibility, of not taking your family’s privileged situation for granted, is helpful in many facets of development and in life.

It isn’t especially helpful for our family members to have specific privileges associated with their name and title.

We are aware that we are the youngest link in a chain of more than 26 generations that have built what we have today.

This awareness instils in us both gratitude for the safety and security of family, but also a sense of responsibility for coming generations.

Prince Hubertus von und zu Liechtenstein is member of the foundation board of LGT Group Foundation