It’s easy for the relatively well-heeled to successfully pass along accrued wealth to inheriting children, right? After all, grantors with sizable assets are well positioned to ensure the optimal transfer of property. They comfortably know that the family fortune will endure across successive generations.
Actually, let’s just rewind that above paragraph and underscore an alternative financial reality that is amply documented in a recent Forbes article. That overview of wealth transfer notes a “decades-long study of 2,500 families finding that 70% of family fortunes run out by just the second generation.”
And the numbers evidencing failed asset reallocation only grow more starkly negative from there.
The bottom line: Successful wealth transfer across multiple generations is easier said than done.
Why is that? What factors centrally contribute to failed family attempts to safeguard and enhance accrued wealth well into the future?
Forbes gets rather specific on that point. In fact, the above-cited piece points directly to a foremost catalyst that it stresses erases family holdings over time. Namely, that is “lack of preparation” by parents to sufficiently educate and equip children concerning the intended wealth they will inherit.
Ideally, the educative process should start early, and it should be both continuous and encompassing. The Forbes article emphasizes the important of teaching future heirs about matters ranging from saving and asset diversification to compound interest, factors spurring wealth growth/dissipation and more. Increasingly inviting growing children’s input on real-world financial matters and asset-linked decisions can also be invaluable for learning.
Many families might reasonably have questions and concerns about accrued wealth and its transfer to future generations. An experienced estate planning attorney can provide candid guidance and tailored legal representation.