A critical part of wealth planning is involving the next generation coupled with continual financial understanding.
Shirtsleeves to shirtsleeves in three generations–or so the saying goes. Believe it or not though, there’s truth to substantiate the claim.
Almost 70% of second-generation families have exhausted the accumulated wealth of their parents, and nearly all families have squandered the wealth by the time it gets through the third generation.
Through the estate planning process, you and your advisors may come up with a fantastic plan to transition assets in a number of ways, but all of that planning goes to waste if your children have no understanding of what they’re receiving. They’ve enjoyed the advantages of a generous upbringing, and in most cases, they’d like to keep up that very same lifestyle indefinitely.
Perhaps it’s possible for this to happen, but only if they work through the same level of planning that you completed, and the earlier they do this, the better. The plan will inevitably change, but the logic and the building blocks remain the same. To be successful, the second generation needs to have a firm handle on the basics of personal finance, an area that often gets overlooked when money is no object.