Once again I begin with a mouthful of a headline. Three big words, and loaded words at that. Let’s look at each one individually.
Transitions are periods of time during which you go from one state to another. Transparency is doing things openly, where you do not hide anything from anyone. Trustworthy is an adjective we use to describe things that we trust, or have confidence in.
Now let’s combine the words into pairs.
If something is transparently trustworthy, it is because the people affected have confidence in what was done because they could see it happen openly.
If a transition is transparent people see it happening and can follow along with the process through its various stages.
And if you want your transition to be trustworthy, it is much better if it is done done transparently.
Let’s look at a few examples, all about men who started and ran family businesses, and the transitions that they faced as they got older. The transitions involved the businesses and the wealth they created, and the impact that those had on their families.
We will start with “Peter”. Peter has two children, both of whom worked in his businesses at times. He has been winding down some of his companies over the past few years, but currently no other family members work for him. He seems to be transitioning himself into retirement mode, but has not spoken about his plans with his children.
His children are his heirs, but remain out of the loop as to what his plans are. They don’t really know what to expect, and they seem to get along much better with their mother. But since Peter has been divorced for many years and now lives with another woman, there is a lack of knowledge and trust in what Peter will do with his wealth.
Then there is Robert. He built a business in which all 4 of his children worked as teenagers. His oldest son worked there as the heir apparent, but about a dozen years ago Robert received a generous offer for the company and sold it.
Since cashing out, the children, now into their mid-fifties, have continued to live their lives as before, expecting an eventual inheritance. Now into his 80’s, Robert is experiencing quite a few signs of dementia.
The family seems to recognize that this is a transition in which they must become involved, but there does not seem to be much urgency, and they are unsure of how to go about it. I strongly suggest that they do everything as transparently as possible, so that everyone will have confidence in the results.
Then there is Stewart. He built a business and sold the operations when he was in his 50’s. His son worked in the business, and continued to take care of the real estate and other revenue-producing assets.
When he was diagnosed with cancer, he went home and wrote detailed instructions for his wife and three children to follow after he passed away. He called a famiy meeting to explain everything. After he passed away, the family began holding annual meetings during which they make major decisions by consensus.
You must first recognize that you are in a transition stage, and then figure out how you will move through it. When you share the information and the process with those who are affected by it things go more smoothly.
You do not have to ask for permission from your heirs to handle your assets the way you see fit, but you should understand that transparency in your actions will breed trustworthiness in the results.