“We have a special talent for putting off tough conversations in our family.”

That is how the story of Meritxell and Joan begins: two siblings who share much more than a family business. They share wealth built up over years, responsibility towards the next generation and four children with very different life plans.

Just like in many families, they both know that sooner or later they will have to talk about passing on the business and family wealth. But it always seems some other time would be better.

Joan is not thinking of retiring yet. The children are not ready to take over. And the conversation is not just about the business: there are also properties, savings, investments and different family needs.

Their story reflects a common situation. When we think about our legacy, we tend to focus on what we will leave behind: a house, savings, an investment portfolio or a family business. But there is an even more important question:

Are we getting our wealth ready to be passed down to the next generation in an orderly and efficient manner that is consistent with the purpose for which we built it?

Inheritance planning is not just about deciding who gets what. It is a fundamental part of financial and wealth planning, because it enables you to protect what you have built up over a lifetime and pass it on more easily.

It can be uncomfortable to talk about. We tend to think now is not the right time, our children are not ready, or we will make the decisions when we are about to retire.

But postponing the conversation indefinitely is also a decision. And it can have financial, tax and emotional consequences.

In the case of Meritxell and Joan, the first step is not dividing up the wealth. It is about defining what they want to protect, the role the company should play in the future, and how they can take their children’s different life plans into account.

Every family is different. And so is their wealth.

Some families hold a significant part of their wealth in property. Others have shares in a family business, investment portfolios or assets in different jurisdictions.

So for inheritance planning you need to know more than the total value of the estate. You also have to analyse:

• how it is distributed;
• the weighting of each type of asset;
• which assets can be easily transferred or divided;
• the income or expenses each asset generates;
• and the role each asset plays in the family plans.

This structure will determine how easy (or complex) it is to pass on the wealth.

In a family such as Meritxell and Joan’s, a company is not just a financial asset. It can also represent a shared history, a source of income, a responsibility and a project that some children may want to continue while others may not.

Liquidity is one of the most important financial concepts in any inheritance planning.

An estate may have a high value while including few liquid assets. This is often the case when a significant portion of the wealth is in property, company shares or investments that cannot easily be converted into cash.

However, when the time comes to pass on the wealth, there are some obligations that cannot wait. There may be taxes, notary fees, administrative procedures and maintenance expenses to pay, or the beneficiaries may have immediate financial needs.

If there is not enough liquidity, the heirs may be forced to sell assets in a hurry, at a bad time or without being able to consider all the alternatives.

Liquidity planning involves foreseeing these needs so the family has time to decide. It is not just about having funds available, but about preventing a financial emergency from affecting the future of a business, property or investment.

The way in which wealth is passed on can have a significant tax impact.

The consequences depend on factors such as the applicable jurisdiction, the type of assets, the relationship between the owner and the beneficiaries, and the way in which the wealth is structured.

The aim of proper tax planning is not to evade tax obligations, but to understand them, foresee them and ensure the wealth is passed down efficiently within the legal framework.

It is also important to remember that planning is not a one-off decision. Regulations may change, but so do families: new members are born, career plans change, assets are sold, businesses are set up and new needs arise.

So the plan needs to be reviewed from time to time.

When we talk about diversification, we tend to think of investments. But asset diversification can also play a significant role in inheritance.

If wealth is excessively concentrated in a single asset, it can be difficult to divide up or manage. This is especially evident when the main asset is a family business or a property that cannot be easily divided.

A more balanced structure can provide:

• greater flexibility to adapt to the beneficiaries’ needs;
• more alternatives for dividing up the assets;
• more liquidity to meet obligations;
• and less pressure to sell assets at a bad time.

Diversifying does not necessarily mean getting rid of assets that are part of the family history. It means analysing whether the current structure will allow them to keep fulfilling their purpose in the future.

In the video, Meritxell says there are “four children with very different life plans”.

That sentence sums up one of the main challenges in inheritance planning: treating family members fairly does not always mean giving them exactly the same.

One child may want to be involved in managing the company. Another may prefer a career in a different sector. One child may need funds to start a business, while another may prefer to hold a long-term investment.

Proper planning enables you to identify these differences and look at how they can be reconciled with the wishes of the owners of the wealth.

The aim is not to make decisions on behalf of the heirs, but instead to provide a clear framework that reduces uncertainty and enables everyone to move forward with their life plan.

Making a will is one of the most important tools in inheritance planning. But it is only one part of the whole.

A comprehensive plan may also include:

• regularly reviewing the wealth structure;
• analysing the available liquidity;
• studying the tax implications;
• checking who the named beneficiaries of certain products are;
• assessing the family’s future needs;
• defining the possible handover of the family business;
• coordinating wealth decisions with long-term financial goals;
• and setting a timetable for reviewing the plan.

The will states how certain assets are to be divided up. Wealth planning helps to create the right conditions so the will can be carried out in the best way possible.

You don’t need to have all the answers to start planning. It is often more useful to start by asking the right questions:

• What do we want to protect?
• What role do we want the company to play in the future?
• What needs might each family member have?
• Do we have enough liquidity?
• Is the wealth excessively concentrated?
• Is our current structure still in line with our family’s situation?
• When did we last review the will and named beneficiaries?
• Who should be involved in this conversation?

Answering these questions allows you to move from a vague concern to a concrete plan.

That is what Meritxell and Joan were looking for when they asked us for help: not a standard answer, but an overview connecting the family, the business, the wealth and next generation’s life plans.

Wealth is the result of years of effort, work and decisions. But its true value is not measured solely in euros. It is also measured by its ability to protect the people we love most and to keep making the plans for which it was built possible.

Inheritance planning is about reducing uncertainties, avoiding hasty decisions and aiding conversations that, while difficult, can provide clarity and peace of mind.

At the end of their story, Meritxell and Joan do not have everything permanently sorted out. But they have done something essential: they have defined what they want to protect, they have begun to talk about it, and they have a plan that they can review as their circumstances change.

They have laid out the pathway.

Inheritance planning does not mean thinking about the end. It is about protecting the future of the people we care about most with the same care with which we built our wealth.

At MoraBanc Wealth Planning, we start from the basis of each family’s purpose and carry out an overall analysis of their assets, liquidity, diversification, tax and the different generations’ life plans.

Do you want to start laying out the pathway? Let’s talk about what you want to protect and the future you want to help build.

CONTACT THE MORABANC WEALTH PLANNING TEAM

You don't improvise the future. You plan it.