Creating Intergenerational Wealth With An Estate Plan

A young couple sits with their estate planning attorney as they go over a plan to pass on intergenerational wealth to their children.

Most parents strive to leave behind a financial legacy for their children. By building intergenerational wealth, you can create a safety net for your family for generations to come. When it comes to building long-lasting wealth, growing your net worth is only half the battle. Creating a plan for how your wealth is transferred and passed down from generation to generation is key to setting your family up for success. Loughlin Law, P.A. helps families create and sustain generational wealth through strategic estate planning. By working with their team of experienced attorneys, you may be able to create an estate plan that aligns with your goals and ensures your legacy for generations to come. To learn more, consider connecting with one of their Florida estate planning attorneys at (561) 677-8384 to schedule a virtual appointment today. 

What Is Intergenerational Wealth Planning? 

Intergenerational – or multi-generational – wealth includes all the financial assets that are passed down within families, from parents to children to grandchildren, and beyond. Traditionally, assets, property, financial investments, businesses, and other resources are handed down between generations, providing financial security and opportunities to the family for years to come. In turn, each generation can leverage this security and opportunity to generate additional wealth, which is then passed down to the next generation.

Intergenerational wealth planning is the process of developing a well-informed, strategic roadmap to help families build, protect, and transition their wealth by accounting for all areas of their financial life. During this process, the individual and their attorney, if they have one, will explore the family’s finances and their short- and long-term goals to identify what is important to the individual and what they aim to achieve with their wealth. Adjusting for changes in inflation, interest rates, and projected investment returns, wealth planning may help families minimize their tax burden and ensure a smooth and efficient transfer of their wealth to the next generation. 

Why Is Intergenerational Wealth Planning Important?

Creating wealth with the plan to pass it on within the family is a valuable pursuit, providing future generations with the foundation to live a comfortable and secure life. If someone has worked hard to build wealth for their family, protecting that wealth is critical. This is where intergenerational wealth planning comes into the picture. Through this strategic process, individuals can more clearly identify the challenges and pitfalls that may put their estate at risk and create a legal plan to mitigate them. 

In recent years, the multi-generational approach to wealth planning has become increasingly popular due to the greater scale and complexity of wealth transfers. These changes mean that individuals need to reconsider how to future-proof their finances and make their wealth work harder for their entire family. The Financial Planning Association indicates that 90% families lose their wealth by the third generation. One of the most common reasons why intergenerational wealth transfers fail is a lack of preparation and proper estate planning.

How Do You Build Multi-Generational Wealth?

Building intergenerational wealth does not need to be complicated. By practicing the following financial habits, anyone may be able to put themselves and their family on the right path to multi-generational financial success: 

  • Use tax laws to their advantage. 
  • Max out their retirement plans.
  • Avoid unnecessary consumer debt. 
  • Leverage estate planning wisely.
  • Invest to outpace inflation. 
  • Diversify streams of income.
  • Utilize life insurance for tax-free benefits.
  • Educate their heirs.

There is a common misconception that multi-generational wealth is reserved for the ultra-wealthy. In reality, by creating an estate plan that matches the individual’s or their family’s goals and properly managing their money to meet objectives as they change over time, many people can build this kind of wealth. The Florida estate planning attorneys at Loughlin Law, P.A., strive to effectively use trusts, tax exemptions such as inheritance tax as explained by the St. Johns Housing Partnership, and charitable giving to enhance your ability to build long-lasting multi-generational wealth. 

What Are Some Pitfalls To Avoid?

In the beginning stages of intergenerational wealth planning, it is important to look out for the common missteps that families encounter. Oftentimes, families face trouble when they delay creating an estate plan. Being intentional with estate planning is a gift to loved ones and will grant the estate owner peace of mind as well. 

Additionally, individuals should try to avoid leaving all their assets and property to one individual – being left with a great deal of wealth is daunting and, if anything were to happen to that individual, the rest of the family may be left scrambling. Finally, individuals should review their estate plan regularly and make updates when life circumstances change. This will help ensure that the plan continues to benefit the individual and their family’s wealth. 

How Much Money Do You Need To Start Generational Wealth?

Quantifying generational wealth can be difficult. Rather, it can be helpful to assume that generational wealth is achieved when someone has accumulated enough assets and investments to support their family’s living expenses long-term – there is no definitive number that equates to generational wealth. This concept is relative, varying from family to family depending on the makeup of the family and how the wealth is leveraged. 

How Is Generational Wealth Transferred After Death?

According to Section 732.101 of the Florida Probate Code, without an estate plan in place, a person’s wealth will be transferred according to state rules and regulations. This outcome can be avoided through careful estate planning to ensure that generational wealth is transferred according to the person’s wishes after death. 

Various strategies can be used to transfer wealth after death while reducing tax liabilities and maximizing the amount of wealth passed down to loved ones. Generation-skipping trusts, irrevocable life insurance trusts, grantor-retained annuity trusts, gifting, and other wealth transfer vehicles can prove useful for distributing someone’s wealth after their death. An attorney may be able to help prepare individuals for a successful wealth transfer and adjust the strategies for new opportunities that arise over time. 

Would You Like Assistance To Create Intergenerational Wealth With an Estate Plan?

Creating generational wealth that can be passed down between generations requires a great deal of strategic estate planning and responsible spending by those who inherit it. At Loughlin Law, P.A., experienced Florida estate planning attorneys help create intergenerational wealth through strategic estate planning. They may be able to collaborate with you to develop a tailored estate plan that accounts for your long-term goals, your family’s future, and your legacy. Their team may be able to assist you to identify and amplify key areas in your estate plan to allow you to maximize opportunities now and in the future. Consider scheduling a virtual appointment with them at (561) 677-8384 to start the process today.

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