“Generational wealth” has become a frequently used term. It usually refers to an aspiration — i.e., that the financial wealth in one generation of a family will be passed on to the next generation of the family.
An aspiration is a necessary starting point, but the goal of generational wealth also requires a plan consisting of 3 core elements:
- Wealth creation (or growth) plan. How will your family establish (or grow) its base of wealth? Will you focus on real estate, marketable securities, intellectual property, or does your family own and operate a business?
- Wealth protection plan. How will your family protect its wealth from risk of loss? Do you have adequate insurances in place? Is the family using corporations or LLCs to shield its assets from personal liability? Have you utilized appropriate tax strategies to minimize tax liability? Do you have long-term care plans for the family’s elders to avoid a spend-down?
- Wealth transfer plan. Do the adult generations have Wills and Trusts in place? Are documents in place to avoid probate where possible? Which family members are the “successors” that are intended to manage the family’s properties or businesses? Are they trained and prepared for these roles?
Every family’s approach to generational wealth will be different. A plan consisting of these 3 elements will help your family to do its best to foster generational wealth. Our firm will be honored to assist you and your family with each of these elements. Schedule a consultation with us to get started.