Inheritance battles among Israel’s wealthiest families, and how they could have been avoided
The Strauss, Wertheim, and Carasso families have struggled to divide shares, authority, and assets across generations, leading to disputes that can destroy businesses and wealth. Without careful succession planning, the founding generation's hard work and savings can be squandered by the third generation.
A study by the Williams Group found that 70% of wealthy families lose their wealth by the second generation and 90% by the third. The researchers concluded that the problems stem from a lack of trust, communication, and financial responsibility among heirs. The Vanderbilt family, once the richest in the world, lost its entire fortune in less than a century, highlighting the importance of proper wealth transfer.
In Scotland, there's a saying: "The father buys, the son builds, the grandson sells, and his son begs." This pattern reflects the first generation's hard work, the second's understanding of wealth, and the third's tendency to squander it. To prevent disputes, experts recommend a structured family wealth plan, including retirement planning for the founder and transfer of assets during their lifetime.
Studies show that families invest in tax planning and asset transfers but neglect heir preparation. Poor communication and reluctance to discuss wealth contribute to unprepared heirs. Dr. Nava Michael-Tsabari emphasizes the importance of intergenerational cooperation and advance planning, including values, agreements, and rules for transferring ownership.
The Carasso family, one of Israel's wealthiest, faced dissent among the third generation, leading to a salaried CEO appointment. The Strauss family, now worth over 13 billion shekels, began with a small dairy farm and focused on orderly succession. The Wertheim family, another example, faced unequal succession, leading to conflict.
The Ofer and Wertheim families' unequal divisions caused disputes. The Strauss family's success lies in their early focus on succession. Israel's lack of estate tax and culture of immediate action pose challenges. Michael-Tsabari advocates for long-term planning, fair share division, and open communication to preserve family unity and business success.
The rise of newly wealthy entrepreneurs in Israel has led to family wealth management firms, promoting "inheritance during life." Experts like Ofek Lugasi and Gilad Slonim advise on retirement and succession planning, emphasizing the importance of letting go of control and defining roles to secure financial futures and family unity.
