One of the most challenging questions to answer as you begin your estate planning is how you can make sure that future generations, your children, grandchildren, great-grandchildren, and beyond, will continue your legacy. How can you ensure that current family members and future generations of your family will act as trusted stewards with your wealth and maintain what you've built throughout your lifetime?
Traditionally, families have typically looked to each preceding generation to provide for and guide the next. However, history has shown us that time and time again, whether because of a marriage that doesn't work out, poor investment decision-making or performance, or an overall lack of stewardship, that generational family wealth can quickly deplete, and sooner than you might expect. That's why you need to prioritize generational wealth management as part of your comprehensive estate planning process.
Start by evaluating the big picture of your wealth and assets by assessing the current and projected or potential future values of your assets. This process is particularly important in the areas of real estate holdings, stocks, bonds, and any other investments. Consider where and how the future generations of your family will receive investment income and the best ways to hold it in trust accounts.
You'll need to consider who you are designating as your beneficiaries. A crucial consideration in estate planning is who will receive your assets. Those assets may include pensions, life insurance policies, retirement savings, investment accounts, homes, or other real estate holdings, as well as many other additional sources of income. Assigning beneficiaries can be a challenging determination, especially as family relationships will inevitably change over time. You might consider if one beneficiary should receive your entire estate, or if multiple family members should be recipients.
You also need to decide whether a family member, several family members, or an outside third party should serve as the executor of your will. Also, you will need to assign powers of attorney to an individual, individuals, or a third party for your financial and medical needs in the event you should become incapacitated.
If you decide to establish trust funds, you will need to set any conditions or expectations regarding how and when those funds are accessed or utilized by your designee. You'll also need to assign an individual or trustees to manage those funds until that family member has met specific requirements or criteria. Conditions for accessing trust funds might include requiring a family member to reach a certain age, achieve a particular life milestone (college graduation, marriage, the birth of their first child, etc.), or any other specific conditions.
Above all, one of the essential components of successful generational wealth management is to start early in bestowing solid financial principles. Teach your children and grandchildren the value of hard work, the importance of proper wealth management and financial planning, the significance of saving, and how to become good financial stewards.
At Hapanowicz & Associates, our caring, experienced, and knowledgeable team can partner with you now to plan for the future of your family. Together, we can begin the planning process, set your financial goals, and pursue your vision for your family's future, so that you can reap the benefits of all your hard work throughout your lifetime.
If you have questions regarding generational wealth planning and management, estate planning, or general financial planning, please reach out to our team. You can also feel free to email me directly at firstname.lastname@example.org.
Hapanowicz & Associates and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.