Six lessons from a real estate family

Succession planning has become one of the central challenges for wealthy families. What determines whether this wealth transfer succeeds is often less about markets or structures - and more about how families communicate, decide and govern. We look at a specific use case to learn about the six most common challenges to watch out for.

For many families, the hardest part of wealth is not creating it, but deciding what should happen to it next - and who should decide. Questions of ownership, responsibility and legacy often remain unspoken for years, until a triggering event forces decisions under pressure.

In my work as a Senior Family Advisor, I have seen these patterns repeatedly. One Swiss real estate family I advise - whom I will refer to as the Millers - illustrates how easily these dynamics arise, and how they can be addressed.

Case study: The Millers - or what a family could do better

The Miller family owns three distinct types of property:

1. Legacy land: a large industrial site where the original family business once stood, carrying strong emotional significance
2. A core Swiss real estate portfolio: income-producing properties
3. Additional investment properties: located partly in Switzerland and partly abroad

All assets are still registered in the father's name. He has three daughters and one son. All four siblings are married, have prenuptial agreements and maintain a good relationship with one another.

Over recent years, the youngest daughter has gradually become the de facto CEO of the real estate business. She manages the portfolio and knows the assets in depth. Yet there is no formal appointment, no written mandate and no clear reporting structure. Her two sisters have little interest in real estate, while the brother is only marginally involved.

Additionally, there is no will, no shareholders' agreement and no shared understanding of key questions:

• Who should own and control the company?
• What should happen to the historic industrial site?
• Which properties should be held long-term, and which should be sold?

To further complicate matters, like many entrepreneurial families, the Millers have become increasingly international. One child lives abroad, the grandchildren study in different countries and some assets are held outside Switzerland. As a result, tax, legal and succession questions are far more complex than they were a generation ago.

The Millers' situation brings together six recurring challenges we often observe when families transfer wealth. Each of them offers insight into where well-intentioned planning can go wrong.

Challenge no. 1: The taboo of wealth

In many families, wealth remains a taboo topic - this is one of the main insights of our recently published "Wealth for impact" study. Around three quarters of next-generation interviewees say they were not taught how to feel at ease with wealth and explicitly ask for open conversations about what wealth means and what it is for. Without such dialogue, many next gens feel unprepared and isolated.

In the Millers' case, fundamental questions had never been openly discussed:

• Is the industrial land primarily a monument to the past or an economic asset?
• Should the real estate business remain in the family at all?
• How much responsibility does each child actually want?

When the family sought our support, the first step was not legal drafting or structural measures, but a deliberate pause. The father initiated a structured family conversation in which, for the first time, each child was invited to articulate how they see their future - and the role the family assets should play in it.

Challenge no. 2: The taboo of succession

A striking number of next-generation family members feel unprepared for succession and fear potential conflict. In many families, succession is managed through de facto arrangements rather than de jure clarity: Someone assumes the role of CEO or lead owner without a clearly defined mandate. This pattern appears repeatedly in our advisory work and is also reflected in the findings of our study.

In the Millers' case, the youngest daughter carried operational responsibility without a formal succession mandate, while the roles of the other siblings remained undefined. There was no shared understanding of what would happen if the father stepped back or died - a textbook example of informal arrangements without legitimacy.

Through renewed, deep dialogue, the family began to differentiate more clearly:

• where the youngest daughter should assume a formal leadership role (the operating company),
• which assets could be jointly stewarded as legacy (the industrial site),
• and where flexibility or partial sales could reduce risk and complexity.

Challenge no. 3: Missing or outdated plans and documents

• One of the key findings of our study is that families whose wealth endures beyond the third generation typically share three characteristics:
• a clear strategy for passing on wealth
• formal governance structures
• a habit of reviewing and adapting both over time
• In the Millers' case, there was no will, no shareholders' agreement and no documented succession plan. If nothing changed, Swiss statutory rules - and increasingly foreign rules for internationally based family members - would determine the outcome. This is precisely the risk of missing or outdated planning: default rules apply, and the likelihood of conflict increases.
• When we first met, the father's instinct was to solve this by designing a highly detailed holding structure in his will. The idea was to keep all assets together and oblige all four siblings to remain co-owners and co-managers under an extensive set of conditions. On paper, this looked like thorough planning. In reality, it led directly to challenge no. 4.

Challenge no. 4: Trying to be "smarter than life"

Many families fall into the trap of trying to design the "perfect solution" - one that anticipates every possible scenario. Our study warns that this often results in over-engineered, rigid structures that quickly become outdated. At the other extreme, some families avoid decisions altogether, hoping matters will resolve themselves.

Father Miller's initial plan - a tightly controlled holding that would force his children to remain bound together under strict rules after his death - is a clear example of trying to be smarter than life. It would have

• frozen today's assumptions into tomorrow's world,
• limited adaptability in an increasingly international context, and
• postponed meaningful conversations until it was too late to adjust.

By stepping back from this approach and engaging his children early, he followed the path more commonly seen in families that succeed over generations: starting with values and principles, listening to the next generation and then building flexible, values-based governance.