Passing wealth to the next generation — and preparing them for it

Why do so many family fortunes disappear?

There’s an old saying — “shirtsleeves to shirtsleeves in three generations.” Wealth is built by the first generation, enjoyed by the second, and gone by the third. Studies of wealthy families point to the same causes: not bad investments or taxes, but a breakdown in communication and trust, and heirs who were never prepared to handle money. The estate documents were fine; the people weren’t ready.

What does it mean to prepare the next generation?

• Financial literacy — age-appropriate lessons on saving, investing, and living below your means.
• Values — a clear, shared sense of what the wealth is for, beyond spending it.
• Judgment — letting kids make small money decisions (and mistakes) while the stakes are low.
• Work ethic — the expectation that they build something of their own, not just inherit.
• Transparency, over time — gradually opening up the picture rather than a surprise at the reading of a will.

How do you actually teach it?

1. 1Start young and age-appropriate — allowances, saving goals, and matching to teach delayed gratification.
2. 2Involve older children in giving — deciding together where the family gives builds values and stewardship.
3. 3Hold simple family meetings — talk openly about money, goals, and decisions so wealth isn’t a taboo.
4. 4Let them practice — a modest account they manage teaches more than any lecture.
5. 5Bring heirs into the plan gradually — introduce them to your advisors and the “why” behind decisions.

Where do the mechanics fit?

The technical tools — annual gifting, trusts, 529 plans for grandchildren, and for larger estates strategies like an ILIT — matter, and they should be built with your estate attorney and CPA. But they work best in service of the family conversation, not instead of it. Structure controls how and when wealth passes; preparation determines whether it does any good.

How does a coordinated plan help?

Multi-generational planning is exactly where coordination pays off: aligning your investments, taxes, estate documents, and giving with a shared family understanding of what it’s all for. It’s a core part of how we think about significant wealth — helping success strengthen a family rather than divide it.