For many, the thought of a legacy includes the inheritance left to future generations. However, as experts note, a true legacy extends far beyond finances, encompassing values and actions that define a family’s impact. This article explores how high-net-worth families can strategically plan to not only sustain wealth but also instill the principles that guide its responsible use across generations.
Why Legacy Planning Matters for Wealthy Families
Discussions about legacy are especially critical for high-net-worth families. Research indicates that engaging children in legacy planning, even at a young age, equips them to manage familial wealth responsibly as adults. The goal is to avoid what’s known as the “third generation curse,” a phenomenon where accumulated wealth dissipates by the third generation due to a lack of financial preparedness or understanding among younger family members. By educating children about their legacy and empowering them to choose causes they care about, families can successfully navigate this challenge.
Teaching Children About Building a Legacy: Starting Early
Experts emphasize that financial and legacy education can begin in childhood. Kevin Reed, chief revenue officer for Aquilance, suggests introducing the concept of legacy as soon as a child is capable of conversation. This includes sharing family history, discussing values, and demonstrating how actions today can influence future generations.
“I think you can start introducing the concept of legacy as early as your child can have conversations with you. Children can learn about family history, the things their family values and how their actions today can impact future generations.” – Kevin Reed
Reed’s personal example highlights the importance of fostering generosity. His daughter’s love for the word “more” led to conversations about contentment and the importance of helping others. Early exposure to charitable giving cultivates empathy.
Brian Weiner, founder and CEO of the Family Office Resource Group, agrees, stressing the opportunity for parental engagement. Nurturing interest in charitable donations teaches independence and demonstrates that a child’s opinions matter.
“This is a great opportunity for parents to engage with their kids… Nurturing interest in charitable donations is incredibly important. It teaches independence and that their opinions matter.” – Brian Weiner
Furthermore, instilling financial stewardship can motivate wise financial decisions throughout life, and viewing money as a tool for impact fosters a healthier relationship with finances overall.
Practical Steps to Build Financial Stewardship Across Generations
Building and maintaining a lasting legacy isn’t solely about safeguarding assets; it’s about equipping future generations to utilize those assets wisely. Here are several actionable steps high-net-worth families can take:
- Create a family mission statement: Define shared values and goals to provide a guiding philosophy for future generations.
- Hold regular family meetings: These discussions should cover financial planning, charitable initiatives, and business interests, promoting transparency and shared understanding.
- Establish trusts and governance structures: Clear and accountable wealth management practices are crucial for long-term preservation and responsible use.
- Work with advisors: Partnering with experts like family office professionals, estate planners, and financial educators can provide valuable guidance and support.
Ultimately, preserving generational wealth requires more than just financial planning; it requires cultivating a shared understanding of values, responsibility, and the power of financial impact. By starting early, engaging children in meaningful discussions, and implementing practical strategies, high-net-worth families can build legacies that endure for generations to come.
