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For wealthy Mexican business owners with children and grandchildren in both the United States and Mexico, finding a fair and balanced approach to intergenerational wealth distribution is a crucial part of the estate planning process. International estate planning attorneys Antonio Gastélum and María Elia Gastélum work with cross-border families like yours to explore the complexities of intergenerational wealth transfers, discuss potential challenges, and suggest strategies to ensure fairness and equality in the context of family-owned businesses.
Define Common Goals
Wealth distribution should be guided by shared aspirations and principles, ensuring that the interests of all family members are considered. We recommend that our clients engage in open discussions to understand the aspirations and expectations of each family member, which will help in creating a comprehensive plan that meets everyone's needs. In fact, we offer an annual family meeting to discuss how an estate plan protects different generations as part of our MEG Cares℠ service. We can also assist you in creating a family office that can handle business succession planning as well as more general estate planning concerns.
Assess Individual Needs and Capabilities
Effective estate planning recognizes that each family member has unique financial needs and capabilities. While some of your children or grandchildren may have a greater need for financial support, others may be more self-sufficient. Assessing individual circumstances allows for a more tailored approach to wealth distribution. Avoid adopting a one-size-fits-all mentality and instead focus on meeting the specific requirements of each family member.
Implement a Structured Governance System
To maintain fairness and transparency, we often recommend establishing a structured governance system within the family business. Typically, this means hiring a professional manager and letting the family share in profits as stockholders. Using a professional manager ensures that decisions are being made based on what's best for the business instead of focusing on navigating interpersonal family dynamics.
Use Life Insurance to Account for Non-Financial Contributions
We encourage our clients to acknowledge and appreciate the non-financial contributions of family members who are not directly involved in the family-owned business. These contributions might include personal support, mentorship, or raising the next generation. Often, life insurance can be used to recognize and reward such contributions—ensuring that these family members feel valued and acknowledged in your overall wealth distribution strategy. Request our complimentary whitepaper, How Should Mexico Residents Hold Life Insurance Policies in the United States?, to learn more about using life insurance as an estate planning tool.