Family legacy: why family bonds matter more than money

After decades of hard work, the Smith family (not their real name) built a conglomerate that included real estate and financial investments in various industries. The patriarch, Martin Smith, had been the driving force behind that growth, but after his death, his children found themselves in the middle of disputes over the inheritance.

Despite the numerous assets left to them by their father, the differences between the brothers became evident. Some wanted to sell, others wanted to diversify their investments, but the most profound thing was that none thought of speaking clearly about the values that had guided Martin in building his empire. Wealth, instead of uniting, ended up dividing the family.

From my professional experience, this type of case is not rare. We generally think of money and property when we talk about legacy, but it is much more than that. 

The meaning of legacy

The term “legacy” refers to what passes on from a predecessor, and its impact can be both tangible and intangible. Actual failures in its transmission often come from a lack of communication, a loss of family identity, and the absence of a shared purpose.

The key to understanding legacy is to consider that what is important is not only what is left in financial terms but also the stories, values, and connections that are passed on to the next generation.

This deeper and more transcendental vision highlights how emotions, principles, and a sense of identity become fundamental pillars of a lasting family heritage.

When a family faces legacy planning, it is common for members to focus on financial aspects such as minimising taxes, protecting assets, or ensuring that investments continue to generate substantial returns over time.

However, when wealth owners are asked what they value most, the answers we consider “sincere” usually go beyond the numbers. They want to make a positive impact that gives meaning to their wealth, improve communication and cohesion in their families, and count on grateful, self-sufficient, motivated, and productive children in the future.

Don’t focus on money, focus on its meaning.

In their book Philanthropy, Heirs & Values (2010), Roy Williams and Vic Preisser studied cases of family wealth in the US. They concluded that 70% of families lose their wealth in the second generation and 90% in the third. The most exciting thing about the study is that this does not happen due to a lack of financial planning or anything like that but rather due to the emotional disconnection between family members and the lack of a single vision of what the legacy represents.

The most common mistake, as illustrated by the Smith case, is to think that money alone can guarantee family cohesion. Quite the opposite: money without a purpose can be a source of conflict.

Instead, families considered to be successful in passing on their legacy are those that, beyond material inheritance, prioritise communication, commitment, and shared values.

Often, the challenge is not to transfer assets efficiently but to ensure the next generation’s readiness, motivation, and connection to family values. According to Oxfam and studies such as the World Inequality Report, this challenge is even more significant globally, where less than 1% of the population controls almost half of the world’s wealth. 

In this environment, the key to preserving the different legacies forged over the years is not only in accumulating wealth but in the ability to transmit it with meaning both for its owners and those around them.

Families often take different approaches to managing family wealth. Some members may act as mere consumers of the resources they have been bequeathed until they are gone. In contrast, others seek a more transcendent impact, adopting the role of guardians or stewards of the family legacy. The latter is rare but highly effective in ensuring the sustainability of the legacy over time.

Stewards focus on investing deeply in the family’s future, not just in financial terms, but in how the resources can contribute to improving the lives of others and leaving a lasting impact on society.

This approach is based on values ​​such as trust, generosity, and courage and requires a long-term commitment to the family and the community. Ultimately, it’s not about how much money you leave behind but about the positive impact that legacy can have on future generations and society.

Money and happiness

One of the recurring themes in estate planning is the relationship between money and happiness. Various studies have shown that additional money does not necessarily contribute to greater well-being once basic needs are met.

The income threshold for happiness is currently around $90,000 annually for each individual. Above that figure, extra money does not guarantee a fuller life or a longer-lasting legacy. Quite the contrary: it can be the reason for the frustrations of those who cannot achieve the material goods that make the people they admire on social media happy.

For many families, balancing material wealth and emotional well-being is the real challenge. This is particularly true in wealth, where lack of communication, mistrust, and disconnection between family members can threaten not only money but also relationships and their stability. The Smiths’ case reminds us that the family legacy goes far beyond material goods.

The true inheritance we leave is in the values, stories, and connections we pass on to future generations.

In a world where wealth is increasingly concentrated, estate planning must focus on building a legacy that transcends the economy and has a lasting impact on the family and society.

Families that succeed in preserving their legacy are those that prioritise communication, commitment, and shared values and understand that money is only a tool to achieve a deeper purpose. As Pericles, the prominent general of Ancient Greece’s golden age, said: “What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others”.

Guillermo Salazar is Founder of Exaudi Family Business Consulting and a senior advisor and associate partner at Cambridge Family Enterprise Group. He is a lecturer, educator, author, and expert on family governance, strategic succession planning, generational transition, and conflict resolution. Guillermo is the recipient of the 2015 FFI International Achievement Award and in 2023 he was inducted in The Hall of Fame of Family Business.