Wealth is often a key factor in determining one’s station in life. Children of wealthy parents are more likely to be successful than children of poor parents. This is not only because they have more financial resources but also because they have access to better education, health care, housing, and opportunities. Generational wealth provides a similar advantage. If one generation can amass a large amount of wealth, it makes it easier for the next generation to be successful. Therefore, it is important to protect generational wealth.
Generational Wealth is a term often used to describe the accumulation of assets and income across multiple generations. For many families, it is the goal to sustain and protect their generational wealth for future generations. While there are challenges in achieving this, there are also several strategies that can be employed to help ensure success.
Generational wealth is important because it allows for the transfer of assets and money between family members. This is important because it helps to keep the stability of a family and can help to ensure that the next generation has an opportunity to succeed. It is also important because it allows for the preservation of a family’s legacy.
However, you should know the following statistics:
- 70% of wealthy families loses their wealth by the second generation
- 90% of wealthy families loses their wealth by the third generation
Challenges to Sustaining Generational Wealth
Wealth, it is said, is a double-edged sword. On one hand, it can provide individuals and families with a life of comfort and security. On the other hand, it can be a burden to pass down from one generation to the next. To sustain generational wealth, there are challenges that need to be overcome.
One of the biggest challenges is ensuring that the family stays unified and focused on preserving the wealth. This can be difficult when there are different generations with different interests and motivations. Too often, we see families break apart due to money disputes. This can be avoided by implementing some simple steps that will help protect your family’s wealth for future generations. One common approach is to have a clear plan for how the money will be used and shared among heirs. Families can also try to keep the amount of money they have in check, so that there is less temptation to spend it frivolously. Another key factor is good estate planning, which can help ensure that assets are passed down efficiently and without conflict.
Generational Wealth Is Earned
It is key that everyone realizes that generational wealth is something that is earned, not given. Here are tips to make sure that you are protecting your generational wealth:
- Make sure that the family is working together towards a common goal: This means that everyone in the family needs to be on board with creating and preserving the wealth.
- Make sure that the family values are aligned with the goals of creating and sustaining generational wealth: If the family does not have shared values, it will be difficult to maintain the wealth over time.
- Make sure that there is a plan in place for how the money will be used and invested: Without a plan, it will be difficult to keep track of where the money is going and how it is being used.
- Ensure that each generation has access to education: Education is a crucial factor in determining success, and it can help break the cycle of poverty.
- Diversify investments: This can be done by investing in a variety of assets, such as stocks, bonds, real estate, and commodities.
- Create a trust or estate plan: A trust can help heirs avoid probate and taxes, while an estate plan can help ensure that assets are passed down to the correct people.
- Make sure that the wealth continues to grow: This can be done by investing in assets that generate income. These assets can include stocks, bonds, real estate, and businesses.
- Protect the wealth from threats such as lawsuits, bankruptcy, and fraud: This requires good planning and a strong legal team. Families that can overcome these challenges will be able to sustain their generational wealth for generations to come.
- Pass down the family business or estate in a tax-efficient way: This often requires planning ahead and making sure the correct legal documents are in place.
Biggest Key to sustaining generational wealth is to be proactive! Sustaining generational wealth is possible, but it does require effort. One of the most important things you can do is make sure your estate plan is up-to-date and reflects your wishes. You’ll also need to keep your finances in order and invest wisely. Finally, it’s important to teach your children and grandchildren about money management and investing. If you follow these tips, you’ll be able to create a legacy for your family.
This is the first in a series of blog exploring generational wealth. Please let us know if there were any topics that you would like us to cover. Thank you!
About Salish Wealth Management
We founded Salish Wealth Management to form a close-knit practice of loyal clients, supplying comprehensive financial services with a personalized, one-on-one approach. Combining disciplined investment strategies with a high-touch, customized approach, we build financial plans that help our clients pursue their goals. We specialize in serving individuals and families, many of whom are in retirement. They’ve accumulated their wealth by long-term savings habits and strong investment strategies and seek a full-service firm and financial advisor who can supply them objective advice and keep a watchful eye over their assets so they can focus on their passions in life. We believe clients choose us because we fulfill this need. Many of our clients tell us they know we make decisions with their needs in mind. We prioritize honest and open communication and supply them the resources they need to plan for and address every aspect of their financial life.
Salish Wealth Management
2122 Barkley Blvd Suite 200
Bellingham, WA 98226
Securities offered through Moloney Securities Co., Inc., Registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Moloney Securities Asset Management, LLC, Registered Investment Adviser. Moloney Securities Co., Inc. and Moloney Securities Asset Management, LLC are not under common control or ownership with Salish Wealth Management.