Multi-Generational Family Wealth Planning

Legacy and family are both inherent parts of wealth planning. Take steps to create and preserve multigenerational family wealth with these tips.

When we think about wealth planning, we often turn to concepts like personal finance management, investments, and retirement planning. However, have you ever thought about what kind of legacy you’d like to leave? What steps would it take to create wealth and pass it on to your loved ones?

According to Forbes, 90 percent of wealthy families lose their wealth within three generations. That means that at some point along the way, family members who inherit wealth make decisions that erode that wealth and have nothing left to pass on to the next generation. A lack of estate planning can also cause wealth erosion due to probate and taxes.

Even if you were to successfully build wealth, the risk of losing it all is high. This indicates that protection and prevention are equally as important as wealth-building itself. In this guide, we’ll delve into multigenerational family wealth planning: what it means, why it’s important, and how to do it.


Before we jump into tips on how to build multigenerational wealth, let’s first define generational wealth, and why it’s something we should all be thinking about.

Generational wealth is wealth that is passed down from one generation to the next. It begins when one member of a family accumulates enough wealth in their lifetime to pass down to their children, usually through a Trust or a Will. In turn, these children may leverage this wealth to create additional wealth and pass it on to their own children, and so on and so forth. Passing on wealth for more than one generation is considered multigenerational.

Building wealth with the plan of passing it on to future generations is valued because it can help provide them with the financial foundation to live a comfortable, secure life. Some families believe the adage, “it takes money to make money,” implying that an inheritance can increase someone’s chances of long-term success. 

For example, one child who inherits enough money to pay for tuition might graduate from college without any debt. Another child might inherit a family home, and is thus set up with housing that could be used as a primary residence, or as a rental income property.

Both of these examples demonstrate how multigenerational wealth planning can set up your loved ones for success much earlier in life. Not only will they be able to begin building their own wealth sooner, they can take advantage of opportunities that might not have been available to them otherwise.


If you’re working hard to create wealth for your family, you should also be thinking about how to protect that wealth to create a long-lasting legacy. All too often, we witness heirs who squander their inheritances. We also watch estates get diminished at the hands of heavy taxes and probate. Both of these unfortunate outcomes can be avoided through proactive estate planning.

This is where family wealth planning comes in. It’s a process through which you can identify risks and challenges your estate might face, and create a plan on how to mitigate them. 

Here are some multigenerational family wealth planning tips to help you get started.


According to NBC News, one in four U.S. adults state that their parents did not provide them with money lessons as a child. There is also a severe lack of financial literacy education in the classroom, although some schools are beginning to tackle the issue.

One cannot expect our younger generation to know how to manage their inheritances in a healthy, responsible manner if we don’t impart any financial wisdom on them. Invest time in providing your children and grandchildren with a financial education, starting with basics such as the principles of giving, saving, and spending.

Practicing basic money principles in a safe environment as a child will help your future heirs develop sturdy financial habits in adulthood. This will increase the odds of protecting multigenerational wealth in your family for years to come.

Not feeling confident in teaching your kids about money? Investopedia recommends 7 finance books for children to help you educate your little ones. See website tiny.one/FinanceBooksForKids.


Although it might feel awkward at first, this is also the perfect time to model financial transparency in your family. In our society, we’ve been conditioned to believe that speaking openly about money is distasteful. More likely than not, your parents have raised you with the notion that talking about personal finances is taboo and not to be spoken about at the dinner table, or anywhere else.

With this arguably outdated belief, many families have never openly discussed their finances with each other. This can cause harm in the long-run, because younger generations won’t understand the importance of financial and estate planning, nor will they know what to expect.

Instead, practice modeling leadership in your family where the family estate and financial values are talked about openly. Try holding family meetings to encourage discussions and hold a safe space for questions. This will expose the younger generation to the concept of wealth planning from a young age, and give them practice to talk about money. A high level of transparency and communication will help ensure that each family member is on-board with values and expectations. The New York Times provides a guide on how to talk about money. See website tiny.one/HowToTalkAboutMoney.

Even if you were to successfully build wealth, the risk of losing it all is high. This indicates that protection and prevention are equally as important as wealth-building itself.


So far, we’ve addressed two aspects of multigenerational family wealth planning: education and communication. We can help our younger generations develop healthy money habits through financial education and communication from an early age. A third aspect of building family wealth is to put plans into action.

As parents, we typically take on the expense of raising our own children. This can include food, housing, childcare, education, and the cost of extracurricular activities. As children get older, they can begin to contribute by working part-time for their own spending money or cell phone bill. However, by planning ahead, we can come up with ways to support them in the long-run as well.

For instance, the largest looming expense for children is college. Not only is it expensive, the cost of tuition and living expenses continue to increase. Most parents want to set up their children for financial success, and one way is to prevent their need to take out student loans. The key here is to start saving early. Many banks offer specialized college savings accounts that allow tax-advantaged contributions. Interest will also help your savings grow over time, and hopefully enough to keep up with tuition rates as they increase.

You should also consider setting up a trust fund for your child. These are fiduciary accounts that allow you to provide financial support for your child, even after you’re gone. You can also include special stipulations, so that you can have peace of mind knowing that funds will be dispersed only upon meeting certain conditions.


When we think about multigenerational family wealth planning, we tend to look toward the future and how to ensure the financial success of our young ones. However, planning for the financial futures of our elders is just as valuable.

Taking care of an aging parent or grandparent can create a financial strain on the entire family. A recent exploration about the Sandwich Generation revealed how adult caretakers spent $10,000 annually, a cost that increased significantly during the COVID-19 pandemic.

This data demonstrates that one should never assume that our older generation will be able to take care of themselves. Here, you can take a two-pronged approach: self-empowerment and family support. 

By self-empowerment, we mean that you can have discussions with your parents and grandparents to ensure that they’re setting themselves up for success as they age. This includes saving up enough money for retirement, setting up insurance policies, and ideally a health savings account for medical costs. Aging adults who can care for themselves financially can relieve financial burden from their children and grandchildren.

However, there are cases when it’s too late or it’s not possible. To protect your own financial health, and that of your younger generations, you may want to consider setting up a family trust that includes savings and investments earmarked for the cost of caretaking if it becomes necessary.

At BWFA, we can help you select the best estate planning tools that will protect your assets as much as possible, while making sure that your future generations will be supported in the long-run. 


A well-crafted estate plan will serve as the legal framework that ensures your multigenerational family wealth planning will be executed, especially if you are no longer available to oversee your efforts come to fruition. For starters, you can communicate your final wishes through a Will. Although they may not be legally-binding, you can also include supporting documents as a part of your estate plan. For example, you can write out a detailed document that shares family history and financial values.

Many families also set up trusts as a part of their estate plans. These are powerful legal vehicles that will help protect your hard-earned assets in the long-run. Trusts provide financial protections and tax advantages, and contain assets such as cash, investments, real estate, and businesses. When setting up the trust, you will also appoint a trustee, who is a firm or individual who will make sure that assets are distributed to your beneficiaries. They are also responsible for following the instructions that you’ve left behind, including any special stipulations for distributing funds to your family members.

Several types of trusts you can choose from include:

  • Revocable vs. Irrevocable Trusts
  • Living Trusts
  • Joint Trusts
  • Testamentary Trusts
  • Charitable Trusts
  • Special Needs Trusts
  • Asset Protection Trusts
  • AB Trusts
  • Blind Trusts
  • Insurance Trusts
  • Spendthrift Trusts
  • QTIP Trusts
  • Credit Shelter Trusts


The list of different types of trusts above demonstrates just how vast the world of estate planning can be. There are a wide array of options that you can choose from, each offering its own unique set of advantages and disadvantages. The task at hand is to choose wisely.

It’s always helpful to work with a trusted professional to select an estate planning strategy that will best support your multigenerational family wealth planning. At BWFA, we can help you select the best estate planning tools that will protect your assets as much as possible, while making sure that your future generations will be supported in the long-run.

We hope that this discussion encourages you to start thinking about the financial future of your loved ones, including your children, future children, grandchildren, and elders. Perhaps you might have even reflected on how your family may or may not have set you on the financial path you’re on now. What could they have done better? What are you grateful for? Every individual is doing their best based on their access to information and resources, so there’s no need to criticize yourself or others. However, this should help highlight just how important it is for families to prioritize financial literacy, communication, planning, and transparency. Is this missing from your family? You can be the one to break the cycle and begin modeling the way.

Is there a question here we didn’t answer? Contact us today to set up a meeting with your BWFA team.

President & CEO