Preserving Wealth Over Generations<\/b><\/p>\n
Several common sayings refer to the phenomenon of losing inherited wealth.\u00a0 One is \u201cshirtsleeves to shirtsleeves in three generations.\u201d\u00a0 Another is \u201cthe first generation makes it, the second spends it, and the third blows it.\u201d\u00a0 These sayings are supported by numbers.\u00a0 According to a recent article in the Wall Street Journal, 70% of family wealth is lost by the end of the second generation and 90% will be gone within three generations.\u00a0 Wealth that comes from family businesses can be even harder to preserve.\u00a0 A 2014 Forbes article reports that only about one in three businesses pass to the next generation and only 10% of family businesses survive to the grandchildren\u2019s generation.\u00a0 Even fewer will last beyond that point, according to the Family Business Institute.<\/p>\n
What causes this phenomenon? \u00a0How can you protect your family from experiencing the same result?\u00a0 Those who inherit money often suffer from the same \u201csudden wealth syndrome\u201d as lottery winners.\u00a0 Both of these groups tend to blow through their wealth in a very short amount of time.\u00a0 This is frequently because they are not prepared, emotionally or practically, to manage their newfound assets.\u00a0 Simply having an estate plan is not enough to prevent this from happening.\u00a0 Families should engage their future heirs in the planning process and help them to understand the purpose of making these plans.\u00a0 If you plan on leaving a substantial inheritance to your children, you should engage them in making financial plans or choices beforehand.<\/p>\n
Family conflict often results in lost wealth. \u00a0Family businesses without effective succession plans can easily fail due to lack of leadership and family infighting.\u00a0 A survey conducted by the Williams Financial Group found that the most common reason for deterioration of family wealth was distrust and failure to communicate among family members.\u00a0 This occurred 60% of the time among those surveyed.\u00a0 The second most common reason was a failure to prepare children to responsibly manage their inheritance.\u00a0 This occurred 25% of the time among those surveyed. Financial planners and estate planning attorneys frequently see anecdotal evidence of this trend.\u00a0 If you want to discuss your financial and estate plans with your future heirs but aren\u2019t sure where to start, ask your advisors for their help.\u00a0 They know how important family communication is to successfully preserving wealth.\u00a0 They will probably have a few ideas about how best to approach these issues. \u00a0Leaving clear and detailed instructions to your heirs in your estate plan may help to minimize conflict.\u00a0 Those instructions should be part of a larger effort to communicate with your heirs about your goals and the reasons behind the planning you have done.<\/p>\n
Sixty percent (60%) of high-net-worth individuals don\u2019t know four (4) important facts.\u00a0 One Wall Street Journal article states that they don\u2019t know (1) annual returns earned by their managers, (2) the fees charged, (3) haven\u2019t evaluated their risk levels or (4) their tax exposures.\u00a0 The first step towards maintaining wealth is educating yourself (and then communicating with and educating your family).\u00a0 Become involved in the process of managing your assets so that you can have confidence that the plans put in place will achieve the objectives that are most important to you.\u00a0 Learn about relevant issues that can affect your ability to preserve your wealth, such as current tax laws.\u00a0 Find a collaborative group of advisors.\u00a0 At a minimum it should include an experienced estate planning attorney, a CPA and a financial advisor.\u00a0 By truly working together they can help you create and implement a plan that will ensure that you and your family are taken care of for your and their lifetimes.\u00a0 Baby boomers are set to inherit an estimated $7.6 trillion over their lifetimes.\u00a0 This number underscores the need for this group to address the issue of wealth preservation if they want to ensure financial security for both themselves and their children.<\/p>\n
If you want to create an estate plan that focuses on preserving wealth and providing security for generations, or if you have questions about how to update an existing plan to achieve this goal, call our office at 888-822-8778 to learn how we can help.<\/p>\n
https:\/\/weatherby-associates.com\/preserving-wealth-generations<\/p>\n","protected":false},"excerpt":{"rendered":"
Preserving Wealth Over Generations Several common sayings refer to the phenomenon of losing inherited wealth.\u00a0 One is \u201cshirtsleeves to shirtsleeves in three generations.\u201d\u00a0 Another is \u201cthe first generation makes it, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2711","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n