Successful Generational Planning


Multigenerational estate planning is estate planning designed to preserve wealth and plan for several generations of a family.  Studies have shown that up to 70% of family wealth is lost by the end of the second generation, and 90% of family wealth can be lost by the third generation.  Therefore, if you wish to engage multigenerational estate planning, you need to make sure your plan is set up to work (and not end up as a negative statistic in a study).

Based on my experience, multigenerational planning can fail due to lack of communication and trust among family members.  This, in turn, leads to totally unprepared heirs which is a recipe for disaster.

Older family members need to understand what attitudes about money and wealth they would like to teach younger generations and what family values they would like to instill in their heirs. They need to help younger generations learn financial competency so that they will be prepared to manage their inheritance instead of squander it.

To do this, older family members need to open the lines of communication.  Opening the lines of communication can help circumvent an entitlement mentality in heirs; reduce any fear of outside influences over heirs; and eliminate any fear of rivalry among heirs. This approach requires the involvement of the family's advisory team, including estate planning attorneys, accountants, and financial advisors, who can help teach the younger generations about estate planning, tax planning, and financial planning, which in turn will give them the confidence to carry on the older generation's values while taking advantage of new opportunities.