Wealth Connexion outlines how you can effectively preserve multigenerational wealth for the future.
Did you know that 70% of wealthy families lose their wealth by the second generation? This worrying statistic highlights the importance of taking steps to preserve your family’s multigenerational wealth. When wealth creation occurs over many decades (or even centuries), not taking precautions can undo all the hard work that got you to this point. In this blog, we explore key strategies you can put into place to preserve your multigenerational wealth.
Understand Your Family’s Values
It’s important to start this process by understanding your family’s values around money, and what this means for your legacy. Thus, you should have open and honest conversations with your children and grandchildren about what your wealth means to you. Discuss how you wish for the family wealth to be maintained and passed down through future generations.
You should also develop a sense of their own values and goals for the future so you can find common ground. Gaining clarity on everyone’s wishes will help guide your plans to preserve wealth in line with your priorities – whether its education, maintaining family properties, or donating to charity.
Organise Your Finances
Organising your finances is the next step with it comes to preserving your wealth. Take stock of all the assets currently held by you and your family and create detailed records to maintain order. This should include an inventory of all assets – including real estate, businesses, investments, bank accounts, insurance policies and other items of value. For each of these assets, ensure to gather important supporting documents such as deeds, titles and account statements. Compiling this information will provide a clearer picture of your overall wealth. This process sets the foundation for making future strategic wealth creation decisions as a family.
Create a Legacy Plan
Creating a legacy plan is an essential step in preserving wealth. This includes establishing clear goals for passing on your assets, in the form of these documents:
- Estate Plan – Your estate plan ensures your assets are distributed according to your wishes after you pass away.
- Wills – Creating a legally valid will is essential for preserving multigenerational wealth. Review your will regularly and update it as needed to reflect changes in your wishes.
- Trusts – Trusts offer even greater control of your assets after you die. They stipulate precisely how and when heirs receive their inheritance.
Establish Ground Rules with Your Family
When preparing to pass on wealth, it’s important to establish clear ground rules to inheritors to manage their expectations. Steps such as teaching financial literacy from a young age can also help ensure future generations develop health money habits and are equipped to manage their wealth responsibly.
It can be helpful to set age-appropriate expectations for your children as they grow by establishing matching funds and savings goals to introduce the concept of wealth creation. To further this education, you could consider making wealth transfer conditional by requiring inheritors to complete financial literacy courses, demonstrate responsibility, or other milestones.
Get Professional Advice
Preserving multigenerational wealth requires detailed planning and strong communication between you and your family members. While this may seem like a daunting task, you don’t have to do it alone. Contact the experts at Wealth Connexion today and start implementing proven strategies for multigenerational wealth creation and preservation!
