Successfully Transferring Wealth to the Next Generation

You’ve tirelessly worked and sacrificed to care for your family and accumulate wealth.  Now comes the hardest part:  successfully transferring that wealth to future generations.  It’s hardest, because a successful transfer involves much more than a smartly designed estate plan. 

 So…how will your children handle their inheritance?  Will they use it to enhance their financial and personal circumstances, or will it dissipate along with their work ethic and sense of personal responsibility?

 Not sure?  The statistics are grim!  They suggest that seventy percent of heirs will lose their entire inheritance within a few years, often destroying family harmony in the process.  Additionally, ninety percent will abandon their parents’ advisory team shortly after receiving their inheritance. 

 Why does this happen?  The answer is simple:  many families fail to plan for the conservation, growth, and transfer of wealth. 

 Here are several things you can do right now to help ensure that your children appreciate and appropriately utilize the fruits of your labor.

 1.  Educate your children.  This means formally teaching them about the responsibilities associated with an inheritance and instilling a commitment to respect and preserve all aspects of your family’s legacy.  This process should begin during early childhood and become more specific as they mature.

 2.  Never underestimate the value of asset protection!  Nasty “stuff” happens…even in the best of families.  Adult children are often confronted with creditors, problematic spouses, spendthrift lifestyles, and the challenges of substance abuse. The solution?  Leave a portion of your estate in a flexible, long-term trust.  This will allow your family to enjoy the benefits of their inheritance while protecting them from the afore-mentioned dangers.

 3.  Protect young heirs…from themselves.  The number one mistake made by most heirs is spending heavily and quickly.  Young adults need time to emotionally mature, establish their careers, develop sound financial habits, and…understand the value of living below their means.  Once again, a long-term trust with flexible distribution standards provides opportunity for heirs to mature before having unrestricted access to their full inheritance. 

 4.  Teach your heirs about the value of trusted advisors.  Heirs often try to manage their own investments.  They take more risk, since they didn’t earn the money.  This often leads to poor investment choices, strategies that expose them to undue volatility, or unscrupulous advisors.  Make sure that they have a relationship with your family’s advisors (wealth manager, attorney, insurance specialist, CPA, etc.). 

 Remember – your heirs are the stewards of your family’s legacy!  Prepare them now, and they will be far more likely to enrich their lives and those of the next generation.


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