Tips for Creating a Multigenerational Estate Plan

Annrose Isaac CPA, CFP®, MBA
Annrose Isaac CPA, CFP®, MBA

Often, estate plans are made one generation at a time. However, if you want to ensure that your family’s wealth remains protected for multiple generations, you may want to undertake a multigenerational estate plan.

Rethinking your approach to estate planning in this way can help ensure your family doesn’t fall prey to this troubling statistic: It’s been estimated that 90% of affluent families end up losing their wealth by the third generation. This could be due to the fragmentation that occurs when an inheritance is spread out, from poor communication, or from poor planning. Whatever the reason, for families that are looking to optimize generational wealth, it’s imperative to have a plan that looks far into the future.

Use the tips below to help guide you if you’re looking to create an estate plan that will support your family’s financial legacy for generations to come.

Establish lines of clear and open communication.

It can feel awkward to talk about money with your family, especially in a society such as ours where we’ve been taught that it’s taboo to talk openly about finances. However, not having that transparency among your family can ultimately end up hurting you because future generations are never given the opportunity to learn about the importance of wealth management, financial planning, or estate planning.

Instead, start establishing lines of communication with your family early on that are highlighted by respect and transparency. Think about holding semi-regular family meetings where you can discuss things like family values, money values, and visions for the future of the family, and create a safe space for any questions your family members may have. Having a high level of transparency ensures that everyone is on the same page and understands what your family values and expects.


SEE ALSO: Multi-Generational Planning: Funding a 529 Plan for Your Grandchildren


Create a smart and comprehensive financial plan.

Having a strong estate plan is necessary in its own right if you’re looking to prolong your family’s wealth, however, it’s only one piece of the puzzle. Having an underlying financial plan that addresses the comprehensive needs of the younger generation as well as the needs of the older generation is also crucial.

Financial Planning for Younger Generations

As your children grow, look for opportunities to teach them about wealth management and smart money habits early on. Let them contribute by working part-time and using that money to pay bills, donate to charities, or invest in their future. This might include contributing to a plan for college expenses, as the cost of tuition and living expenses continue to rise.

Educate the younger generation.

You cannot expect your children, grandchildren and beyond to be smart with their inheritance and the family’s wealth if you don’t take the time to teach them about personal finance and smart money habits. Invest time in teaching your children and grandchildren financial literacy, starting with the basics such as spending, saving, and giving. As they get older, their financial education could include internships, mentorships, and investing strategies. The more you empower the younger generation with the tools they need to be smart with their money, the more peace of mind you can have knowing that your vision for your family’s financial future will remain intact even when you’re gone.  Wade Financial Advisory offers services that are intended to provide financial guidance to your children who have started their careers and we encourage you to discuss these services with your advisor.

Financial Planning for Older Generations

Taking care of an aging parent or grandparent can put a huge financial strain on the entire family if not properly planned for. Difficult as it may be, start discussions with your parents about their finances, how they are planning for their future, and what they want for themselves as they age. You’ll want to ensure that they’re saving enough for retirement, setting up any insurance policies they may need, investing wisely, paying attention to taxes and putting aside some savings for healthcare costs.


SEE ALSO: Considerations for Passing an Inheritance to Your Children


Establish a trust and appoint a trustee you can depend on.

A trust is a powerful legal vehicle that allows you to protect your assets over the long term. It can provide protections and tax advantages and work well hand-in-hand with your will. Be sure that when you’re setting up your trust you appoint a trustee who is neutral and objective and can assist in ensuring the wealth is properly managed and distributed. Inform those whom you have named as a Trustee and let them know who your professional advisors are so that they know who to contact when needed.

Protect your legacy with a well-thought-out estate plan.

Estate planning is already a complex journey to navigate, and when you decide to take a multigenerational approach it can become even more overwhelming. Taking the time to embrace the younger generation and educate and empower them with the tools that they need gives your family the best opportunity to preserve and grow wealth. Consider lifetime gifting as well as future inheritance as a  method of passing wealth on to the next generation. Your Wade Financial Advisor can help you understand the tax impacts of various gifting and inheritance strategies so that you can minimize income and estate taxes.  Coupled with open communication, transparency, and a robust financial plan, your estate plan can help your legacy last for generations to come.

At Wade Financial Advisory, we understand the intricacies of multigenerational wealth management and how important it is to ensure your family is taken care of. If you’d like to start a conversation with one of our financial advisors about your estate plan and vision for your family’s financial future, please contact us today.

This communication contains the opinions of Wade Financial Advisory, Inc. about the securities, investments and/or economic subjects discussed as of the date set forth herein. This communication is intended for information purposes only and does not recommend or solicit the purchase or sale of specific securities or investment services. Readers should not infer or assume that any securities, sectors or markets described were or will be profitable or are appropriate to meet the objectives, situation or needs of a particular individual or family, as the implementation of any financial strategy should only be made after consultation with your attorney, tax advisor and investment advisor. All material presented is compiled from sources believed to be reliable, but accuracy or completeness cannot be guaranteed. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENTS BEAR RISK INCLUDING THE POSSIBLE LOSS OF INVESTED PRINCIPAL.

Wade Financial Advisory, Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Wade Financial Advisory, Inc. at (408) 369-7399 with any questions.

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