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Leaving Behind a Legacy: Generational Wealth Planning Thumbnail

Leaving Behind a Legacy: Generational Wealth Planning


For many, a legacy centers around the size of your estate when you pass. It is human nature to try to ensure financial security for your children, their children, and future generations to come. It is also common for inherited wealth to be gone and spent within three generations.

Generational wealth planning involves considering many different aspects of financial planning. Not only do you need a plan to grow the wealth today, you also need to ensure the beneficiaries are prepared for such an inheritance when the time comes. Here’s how you can approach estate planning in a way that will last for generations.

Developing a Generational Wealth Plan

Creating a generational plan can be approached in two key phases.. First, the legal documents. Second, you will need a detailed plan outlining how your beneficiaries should address your wealth after your passing. There are several steps you can take now to begin the planning process.

Think Ahead, Far Ahead

It’s important to remember that generational wealth planning is a bit different from designating gifts for your kids and grandkids through estate planning. When you start making a generational plan, you need to be considerate of future generations — even the ones you’ll never meet. It may be hard, but try to think of your family as people who haven't even met you. The point of generational wealth planning is to pass your assets down to those who haven't been born yet, but it can be hard to try to consider their needs alongside the family members you already know and love.

Have Conversations With Your Family

If you want your wealth to last for generations, it’s crucial that you communicate your desires with your family. Everyone must be on the same page when it comes to leaving a legacy for future generations.

You are your family’s best resource for wisdom and guidance when it comes to this, so don’t make the mistake of thinking that your money and values need to be kept secret. Take the time to educate your children and grandchildren, sharing your vision with them so that they aren’t left feeling confused and frustrated. This is an ideal opportunity to involve your financial advisor, as they can help you communicate your vision and answer any of the more technical questions your family may have.

Put It in Writing

Putting your plans in writing can rid future generations of potential doubt or confusion regarding your wishes. Your heirs are the ones who will truly be carrying out your generational wealth plan after you are gone.

Make sure you specifically identify how the money should be used, how it is accessed and how it is replenished. With proper planning, it’s possible that your money could be used to invest in higher education, starting a business or other things that will help your family grow their wealth for decades to come.

Create a Support System

Do you know what a sustainable withdrawal rate is for your assets? It's possible you may not. And if you don't know, it's highly unlikely your heirs will know either. Understanding this, along with a number of other technical details, is an important part of maintaining wealth for decades to come. This is why working with the right system of financial professionals could be your greatest chance at successful generational wealth transfer. They will have the advantage of working one-on-one with you to determine your goals, develop a plan, educate your heirs and help them stay on track.

How Could Biden’s Estate Tax Impact My Plan?

Biden’s estate plan proposes the highest inheritance taxes in a century. At its steepest, an individual could be taxed at a rate of 61%. Yet, the federal estate and gift taxes have changed over a dozen times since 2001. It’s important to be aware of how present legislature can impact your plan. Your financial advisor can help you develop a solid plan for the future.

If you think you’re ready to start creating a generational wealth plan, remember to have a clear vision and share that vision with your family members. Put these wishes into legal documents, too. Your trusted financial professional can help you begin the planning process, speak to your family members and answer any questions you may have.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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