Key points
- Too often wealth transfer plans depend on one person, making them fragile when life changes
- Stress testing plans against real-life scenarios reveals gaps before they cause problems
- Closing knowledge gaps and strengthening governance are critical
- Families that plan realistically protect both their wealth and their relationships
Wealth transfer plans often look complete, with documents such as wills, trust deeds, and other legal documents carefully prepared. Yet they can lose their effectiveness if the person expected to take on an important role is unprepared or unable to act. For example, when executors, attorneys or trustees (“controller”) live overseas, relationships are strained, engagement in financial matters is low, disagreements arise, or a controller lacks the capacity to assume responsibility.
How can families avoid this risk? The truth is that even the best plans are often built on assumptions of harmony and predictability. Real families face distance, divorce, conflict and very different levels of financial engagement. Unless these realities are addressed, even well-structured plans may not perform when needed most.
This is where stress testing comes in. By working through uncomfortable but realistic scenarios with advisers, families can uncover weak points and build plans that continue to transfer wealth smoothly across generations.
The myth of predictable order
The starting point for wealth transfer plans are typically built on the assumption that life will unfold in a predictable order. Parents pass away before children. The financially active spouse outlives the less involved one. Siblings cooperate and share assets fairly.
In reality, families live with uncertainty. A parent may pass away earlier than expected. A surviving spouse may remarry and have more children, creating new obligations. Children may disagree on whether to sell or hold a family asset. These are common situations rather than rare exceptions.
Stress testing these assumptions reveals how vulnerable a plan can be when life does not follow the script. The answer can be to build flexibility into structures and ensure decision-making continues even if a key person is unable to act. Families can work with advisers through a ‘what if’ framework, testing scenarios such as unexpected death, remarriage or disputes over assets, and then adjust their plans so they remain effective under pressure.
Closing knowledge gaps between spouses
In many households, one spouse takes the lead on finances while the other remains less involved. This may work in day-to-day life, but it creates risk if the active spouse dies first.
The surviving partner may be left with complex trusts, tax obligations and investments they barely understand. Decisions may be delayed, and financial confidence can be shaken at the very point when it is most needed. Other family members may even question whether the survivor is able to manage the wealth, which can increase tension.
Stress testing this scenario helps families see whether the less involved spouse could step into the role with confidence. Strengthening the plan can be as practical as centralising records of assets and advisers, appointing alternate signatories to key accounts, or rehearsing decision-making through ‘fire drill’ sessions with an adviser. These steps reduce the risk of knowledge being retained by only one person and ensure continuity when circumstances change.
The reluctant controller
Another common assumption is that nominated controllers will want the responsibility. In practice, not all controllers see it that way. Some may disagree with the family’s investment approach, while others may feel unprepared or unwilling to manage the obligations that come with wealth.
When a reluctant controller is central to the plan, the transfer of wealth can stall. A controller who declines to act may delay distributions and create legal complications that frustrate beneficiaries.
Stress testing for reluctant controllers exposes whether the plan can still function without full cooperation. Families can strengthen their arrangements by appointing multiple controllers, designing staged inheritances that release funds in phases, or naming professionals to act alongside family members. Some also establish exit protocols that allow controllers to opt out while ensuring assets are still managed fairly. These approaches keep wealth transfer on track even when participation is limited.
Building resilience through governance
Wealth plans that rely heavily on individuals are fragile. Good governance spreads responsibility and introduces structure if emotions run high.
This may involve independent trustees, family councils, or investment committees that create forums for decision-making. The most effective governance frameworks are not symbolic. They have clear authority, defined processes, and the ability to act when disputes arise.
Testing the strength of governance by removing the usual leader from a simulated scenario often highlights where decision-making is too dependent on one person. Strengthening governance may mean creating a family charter with escalation procedures, adding independent voices to committees, or giving formal authority to decision-making bodies. Advisers can guide these steps so governance can be provided when families need it most.
Practical steps for stronger wealth transfer
- Start early, before mental or physical impairment limits decision-making
- Share knowledge so more than one person understands key structures
- Plan for reluctance by building in alternatives
- Strengthen governance with clear authority
- Stress test plans regularly against unexpected scenarios
Have a question or need help managing your intergenerational wealth transfer?
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