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Preserving Your Money and Property Beyond the Third Generation

Nov 30, 2021

Whether you have inherited your wealth or have built it yourself, you likely want to share this wealth with the next generation and beyond.  

The quotation “shirtsleeves to shirtsleeves in three generations” has often been attributed to Andrew Carnegie. The same concept has been echoed by other people and various cultures, with the underlying notion being that the first generation builds the wealth, the second generation spends the wealth, and the third generation rarely sees any of the wealth.


How an Estate Plan Protects Family Wealth

An estate plan puts your intentions into writing. California has a default plan for what happens to your money and property at your death if you die without an estate plan. The state’s plan is the same for everyone and very likely doesn’t divide you assets the way you would want to. Of course, you can choose a plan that takes your beliefs and desires into consideration—you just need to put it in place.

A family trust can be a valuable tool when planning for the long term. Not only does a properly funded trust avoid the costly, time-consuming, and public court process known as probate, it also provides instructions for exactly what should happen to the money and property owned by the trust. The trust instructions can lay out who will receive the money and property, how much the person will receive, and when they will receive it.

You can choose to create discretionary trusts for your beneficiaries to protect the money and property you leave for their benefit. Discretionary trusts allow the trustee to use their discretion to determine when and how much money and property to give to your heirs. Because the heirs are not guaranteed a specific amount of money or a particular piece of property, the funds are better protected from any of their future creditors or former spouses and, consequently, preserved for your other heirs. By choosing a trustee you trust to run your trust, you can ensure that your heirs will be cared for without jeopardizing the wealth you have worked hard to build.

In addition to a legal document such as a trust agreement, you can write a letter to be shared with your loved ones. In your letter, you can carefully explain your goals and wishes and express your intentions in your own words without worrying about precise legal language. The information can alleviate the possibility of family fighting, explain why the money and property are being divided and distributed in a specific manner, describe your desire to benefit multiple generations with your estate plan, and provide instruction on how to successfully preserve the inheritance.


An estate plan provides teachable moments through lifetime gifts.

If you are concerned about your wealth lasting for future generations, giving tax exempt gifts during your lifetime can be an effective solution. Although it may sound counterintuitive to give money to an individual who may not be financially savvy, a lifetime gift can allow you to counsel and guide the recipient on how to best use the money while you’re alive to do so. In many cases, heirs squander their inheritance because they do not know how to properly manage their money. A lifetime gift could be the means for teaching valuable lessons that promote long-lasting, multigenerational legacy planning.


How to Get Started Protecting Your Family Wealth

Providing for multiple generations through your financial and estate plans is a significant legacy to leave your family. As previously mentioned, ensuring that it is done properly requires careful planning with experienced professionals. To take the next step in your planning, consider the following steps (if you have not already done so):

First, meet with your professional advisors.

  •  We at Bennett and Bennett are available to sit down with you and capture your wishes and instructions in a legally enforceable document.
  •  Your financial planner can offer you valuable insights and structure your finances to reinforce their growth and availability to future generations.
  •  Your tax professional can advise you on the short- and long-term tax consequences of any financial or estate plan you are considering or have already implemented.
  •  Depending on the type of estate planning strategy you use, your insurance professional can provide appropriate insurance for you, so your assets are protected for future generations.

Second, consider having an honest conversation with your family. Talking about death and money can be a sensitive topics that stir up many different emotions. However, to ensure that your wishes are carried out in the way you want, you should let your family know ahead of time what to expect. If they know and understand your plan, they will be in a better position to honor your wishes.

Helping families is our passion, and we are committed to making the idea of “shirtsleeves to shirtsleeves in three generations” a thing of the past.We at Bennett and Bennett are committed to creating estate plans that will disprove those words and provide wealth for many future generations. Schedule a consultation with us today, so we can discuss your wishes for the future and help you craft a plan that will benefit many generations of your family to come.

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