5 Different Ways to Protect Generational Wealth

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Generational wealth can be defined as protecting and preserving your assets for your children, spouse, or grandchildren after you pass on. Sustainability is the most difficult thing to consider when creating generational wealth, but it’s possible for your assets to endure the test of time.

How to Protect Your Generational Wealth For Centuries

Building generational wealth is attainable for everyone as long as you invest your money in the right ways. 

Here are 5 ways you can protect your generational wealth for hundreds of years.

1. Commit to Proper Financial and Investment Planning

It won’t matter how much your wealth has grown over time if you aren’t committed to a strict financial plan. Future generations could lose their inheritance to high estate taxes, professional fees, and poor investments. Or even worse, your money could end up in the wrong hands.

To keep your money where it’s supposed to be, start a road map that plans for the direction and sustainability of your family's wealth. This should incorporate tax planning, but that may be hard to do on your own. Speak to an experienced financial planner if you need help creating a plan.

2. Set Up a Trust to Manage Your Money After Your Death

A trust is a fiduciary document that gives a trustee the legal right to hold on to a beneficiary's assets on behalf of the trustor. Trusts are practical tools that are added to a will for the purpose of giving the beneficiary instructions on how to manage your wealth after you pass away. 

In some instances, a trustee and beneficiary may be the same person, but that may only be the case if you trust the beneficiary to handle the money themselves. For example, an irresponsible adult or child shouldn’t be given an inheritance directly, or they could spend recklessly.

3. Invest in Your Child’s Secondary Education 

While intelligence and a better education won’t guarantee your children will be better with money, they can set your children up for a better life. Since college-educated Americans are more likely to find gainful employment, it reduces the chance that they’ll spend their inheritance.

College-educated Americans are also more likely to appreciate the value of hard work, as they understand what it takes to get a degree. If they don’t want to go to college, provide them with what they need to start a business or freelance successfully, so they can keep their wealth.

4. Teach Your Children About Personal Finances

Too many Americans aren’t educated about finances, which is the leading cause of the debt cycle found in trust-fund kids. There isn’t any reason for your children to overspend, but they will if they don’t understand the value of money, where money comes from, and its purpose.

It’s important to talk to your children about why they may want to save money for their children, children’s children, or, at the very least, retirement. Explain that it’s okay to buy nice things once and a while, but these habits can quickly empty their bank accounts and cause financial stress.

5. Spend Quality Time With Your Children and Grandchildren

Building up generational wealth takes a lot of time and energy, but you can’t forget to spend quality time with your children. Your relationship with your children shouldn’t be all about business, as your kids will remember quality time more fondly than your financial lessons.

It’s also important to show your kids what good financial planning can do for them in the here and now. Take the time to talk about how you got to this comfortable position. If you have luxury items, like a boat or a summer home, explain that this wouldn’t be possible without wealth.