BY PAYTON HOSTENS
Leaving behind a legacy when you die is a common goal. To do so, individuals strive to provide financial security for their children, grandchildren, and the generations to come. However, creating a legacy takes more than setting a goal. Growing generational wealth requires thinking ahead, communication, and most importantly, an effective multigenerational estate plan.
Most estate plans focus solely on the next generation and fail to account for future generations. However, to build multigenerational wealth, the longevity of your fortune must be a priority in your
estate planning. Your immediate heirs may still benefit from your financial legacy; but ultimately, your estate plan should serve as a guideline to direct the management of your assets for years to
come, rather than leaving an instant windfall for the living heirs upon your death.
There are several things to consider when creating your multigenerational estate plan, including what estate planning tools will best serve your goals. Trusts, life insurance, 529 college savings accounts, and investment accounts are only a few vehicles available to accomplish estate planning goals. An effective multigenerational estate plan will likely utilize a combination of several estate planning tools. If properly executed, these tools can be used to reduce the impact of probate, taxation, and other risk issues, while maximizing the growth of your wealth.
A key component to ensure the success of a multigenerational estate plan is communication. If your goal is to preserve and grow your financial legacy, communicate your wishes to your heirs – likely your children. Your children should be prepared to take on the responsibility of managing the assets you will leave behind when you pass. It is important to give your children the opportunity to learn about financial matters and investing, the estate planning tools you put in place, and their role as executor and/or trustee.
You may have the experience and knowledge to build wealth, but be sure to pass that experience and knowledge to your heirs before you pass away. It should be noted that changes in the family or the occurrence of major life events can impact estate plans that have already been drafted. The birth of a child, marriage, and divorce are examples of events that may necessitate a second look at your estate plan.
Your estate plan must be carefully drafted to ensure your wealth remains protected and generational wealth transfers are optimized even in the wake of major changes. Building a legacy that truly outlives you is no small feat. Knowledge and expertise are invaluable additions to multigenerational estate planning. Abrahams Kaslow & Cassman LLP attorneys have over 77 years of estate planning experience. Consider discussing your goals with one of our estate planning attorneys to maximize the options available to you.