Three considerations to wealth planning
for the multi-generational family

The wealth you and your family worked hard to build can quickly erode when passing it from one generation to the next. Lack of experience or financial education are just a couple of the circumstances that could have serious implications on your legacy.

It is wise to safeguard your family by establishing a multi-generational plan, so you are in a financial position to care for loved ones down the road. A prudent first step is finding a professional financial advisor who could build a plan that is comprehensive, collaborative, and clear to execute. The plan should be designed to meet your family’s unique needs and prepare your children and grandchildren to carry on your legacy—the way you intend.

Further, as the wealth is transferred across generations, it is important to incorporate their windfall into comprehensive plans for each beneficiaries. Your advisor can help with this, too.

Here are three important considerations when starting your multi-generational wealth plans.

Set realistic goals and expectations

Focus on your family’s best interests. Passing wealth to future generations can provide a foundation for each person to lead a financially comfortable life, with opportunities they might not have, otherwise.

Include family members in the planning process to help them understand your intentions.  Remove obstacles and make it clear what support might be coming their way. Prepare youngsters to use their assets to accomplish important life goals or to support good causes, versus frivolous or lavish lifestyle spending.

Consider family members who might not be capable of making decisions for themselves or whether access to wealth might create more problems than it could solve. An advisor can identify instruments—trusts, education funds, guardian or custodianship—to address the needs of minors, persons who are mentally disabled, or those with spendthrift behaviors.

Transparency and open communication could circumvent a lot of issues. These practices work to safeguard your values, build trust, reinforce the importance of responsible planning, and align each person to their own responsibilities.

Help the next generation help themselves

One measure to prolong your family’s wealth, in addition to defining aspirations and expectations, is to involve beneficiaries in the financial planning process early on. Talk to them about the importance of planning for their future. Encourage kids and grandchildren to set specific goals, such as education or entrepreneurship.

Often, youngsters do not know how to handle wealth because they may not have the tools or experience to do so. Teaching the basic principles of saving and investing and the benefits of lifetime giving can start at a young age. As they mature, show them how to build and protect wealth and independently maintain a financial plan. 

An experienced advisor can act as a liaison between generations and offer consistency and constancy of advice. Make an appointment with your advisor to create individual financial plans for each person, so they are well-positioned to inherit and responsibly manage substantial assets.

Transfer multi-generational wealth without the surprises

An estate plan—which includes tax, charitable giving, and business succession solutions—is part of holistic, financial planning. When managing an estate that involves multi-generational wealth, prepare for the unexpected. Your plan should be clear, concise, kept up-to-date, and built to be executed according to your wishes.

Being vague or leaving room for misinterpretation could lead to internal disputes. These might cause multi-generational wealth to be misspent and legacies sent astray.  By serving as a liaison, your advisor can keep key people informed and aware of their own responsibilities. Asking tough questions helps to protect assets, balance inheritances, and reduce family disputes.

Get ready for the long-term

Building and executing an effective multi-generational wealth plan is not a simple undertaking and its importance should not be underestimated. Working with a financial advisor could smooth the process and reveal unique, actionable solutions.

There are many options to design a plan that addresses your needs. Getting it right could make a difference in carrying out your legacy and guiding your family’s long-term, financial progress.

Citizens Wealth Management’s advisors offer guidance and powerful tools to help safeguard your wealth and legacy. Find an advisor today to build a financial plan suited to your family’s unique situation.