Beyond the tax consequences covered in the first post, there is a human element that does not appear in any financial model.
Beyond the tax consequences covered in the first post, there is a human element that does not appear in any financial model.
Relationship with Complex Assets
The wealthy family patriarch who built a business over thirty years has a relationship with that business that cannot be replicated by a successor. He knows the customers. He knows which employees are essential and which are coasting. He knows where the bodies are buried - figuratively speaking - and he knows which relationships need to be managed carefully. Selling means giving up a role, a purpose, and a set of relationships that may have defined his professional life, not just an asset.
The same is true, in varying degrees, for real estate, private equity investments, and even alternative assets. The founder of a business is not always keen on the next generation selling, but that same founder has pretty much the same view on everything he or she ever bought, not just the ones they built.
An investor remembers when they learned of the investment, the meetings and analysis that went into it, and then the transactions that followed. They remember not selling right before it ran up “the last time” or they remember the time that they refinanced the property when interest rates were near zero. They remember getting through closing, or getting an unexpected big check or maybe it just survived this long when it should have died long ago. There is always a decision to make, and for many investors, they have been through the good and bad times with these holdings - they will find a reason to keep it.
Skill Sets
The current owner has built up a set of skills and knowledge that makes managing these assets feel manageable. For the next generation, starting from zero, it is a different proposition entirely.
Many complex assets - operating businesses, real estate portfolios, hedge fund positions - require active management and ongoing judgment. The current owner is equipped to provide that judgment; the next generation must acquire those skills, pay others for them, or lose money on future holdings (on average).
What is the real cost to families when assets are sold by the generation that does not really understand them? The economic downside of waiting to sell – lower pre-tax proceeds - is likely understated when the selling generation lacks the experience of the generation that acquired the holdings. The decision to wait is also an unintentional choice not to use the buying generation’s skills to sell at the right time and reinvest in better assets.
Next, I’ll look at where the proceeds go and the work it takes to sell.
Why Do People Keep Assets Until Death? Part 2 of 3.
Wealth Machine, a Secret Art of Planning series.
I’ll be discussing these ideas at the Notre Dame Tax & Estate Planning Institute, October 30, 2026.
Register for the conference to attend my presentation and the other sessions.
https://lnkd.in/ehEjXur5