Estate lawyers in Kansas City and beyond have witnessed the demise of family wealth again and again. A lack of a plan when creating generational wealth is part of the problem.
It’s unfortunate that, according to the Wall Street Journal, when an affluent family passes wealth to the second generation, that generation will lose 70% of it. By the end of the third generation, 90% of it is gone. This has set up a cycle in the US where one generation works incredibly hard to accrue wealth. They then, pass it along to the next generation who don’t quite understand what it took to earn that fortune. Therefore, they squander the vast majority of it, leaving only a fraction to their own descendants. By the following generation, it’s back to the drawing board. Creating generational wealth is a process of understanding the sacrifices of a family over the years, developing a strong plan, and following through with that plan.
Working with a Kansas City estate lawyer is an important step in protecting family wealth. However, there is more to it than simply setting up the right shelters or trusts. If there’s a lack of communication or if heirs don’t properly prepare to manage their inheritance, the wealth simply won’t last.
Develop and Share Your Family’s Story
Every family has its own unique history, values, and paths to the present. These come together to create your family’s story. For some reason, though, the family story isn’t always fully developed and articulated to all its members. It’s likely up to that first generation to build that story and to infuse it with ideas about where the family has been, how it’s gotten where it is, and what the vision is for the future. Along with these aspirations, plans for how to make them happen should also be drawn out.
Creating Generational Wealth By Understanding Your Family Story
With this family story developed, it’s time to share it. When all of the family members (especially those who will be heirs) have a good understanding of the work involved to get them where they are, as well as what needs to happen to keep the family on track, they’re much less likely to squander it. The story should be augmented with life lessons regarding the family’s values so they can be internalized and supported by each generation. An inheritance is going to be better cared for when those receiving it have a strong sense of both personal and familial responsibility. Enabling your family to continue creating that generational wealth over time.
Make It Your Family’s Reality
Discussing the family’s story and values might seem like it has little to do with estate and asset protection planning or creating generational wealth, but it’s all part of the bigger picture. Collect the thoughts and wisdom of the family leader and make the story something tangible…maybe a book that everyone can share or have copies of. Additionally, family-building events and activities are beneficial in continuing to strengthen bonds and get everyone on the same page.
Some people call this book or collection of stories, documents, etc. a “Heritage Statement.” The idea is that the family can use these experiences and the documentation to grow closer and to exercise the right restraint, work ethic, and personal responsibility required to make the wealth last for generations to come. The Heritage Statement should also be shared with tax lawyers, financial advisors, and others involved in the long-term planning of the family and its wealth.
For assistance dealing with an estate, we invite you to contact Modern Wealth Management’s estate planning lawyers and schedule a complimentary consultation below.
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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.
Written by Garrett Griffin, BFG Legal Services