Have you ever considered the legacy you want to leave behind? What would it take to accumulate substantial wealth that could be passed on to your loved ones?
All too often, families only plan for a one-generation wealth transfer, meaning that it’s highly probable that generations two and three and beyond may not experience the benefits of your hard work. That’s why multigenerational financial planning for high-net-worth families is so important.
Even if you have successfully built wealth, the risk of losing it in the future is significant. This highlights the importance of not just wealth creation but also the need for preservation and effective transfers. As fee-only investment advisors in Denver, we specialize in providing multigenerational family services tailored to our clients’ needs.
Creating a Sustainable Multigenerational Financial Plan for Affluent Individuals and Families
Creating a legacy involves more than drafting a few legal documents—it’s about creating a foundation that will last your lifetime and be transferable to future generations. This includes retirement and estate planning services based on your goals for a lasting legacy that benefits your family members and any philanthropic interests you may have.
The following are three frequent challenges that can get in the way of having a sustainable multigenerational financial plan:
Lack of Family Communication and Involvement
One of the most common pitfalls in multigenerational financial planning is the lack of communication between family members. Conversations about what will happen after you pass are emotional, so it’s not uncommon for people to hesitate to have these types of discussions with their families.
If you don’t communicate openly with your heirs, it can lead to misunderstandings, conflicts, and, ultimately, a dilution of wealth over multiple generations.
Schedule Regular Family Meetings
Regular family meetings are an effective way to foster open communication about financial goals, expectations, and responsibilities. These meetings should include discussions related to your family’s financial values, the purpose of the wealth, and the roles each family member will play in managing and preserving it.
By involving all key family members in the planning process, you can ensure that everyone is on the same page and that your legacy is carried forward in alignment with your intentions. You are also creating a precedent for communication that future generations can carry on.
Financial Education for Next-Generation Heirs
Educating your heirs about financial management is crucial for ensuring they are prepared to inherit, preserve, and transfer wealth in the future. This education can be provided through formal courses, workshops, or one-on-one sessions with your Denver wealth manager.
Jupiter Wealth offers tailored financial education programs to equip future generations with the knowledge and skills to manage their family’s assets more effectively.
Don’t Overlook the Tax Implications of the Estate Plan
Your goal is to maximize the amount of your assets that go to heirs, not the IRS. This type of planning is complex because there are so many optional strategies.
Tax planning is a critical aspect of multigenerational financial planning, yet it’s often overlooked or not given the attention it deserves. Without proper tax planning, much of your wealth could be lost to estate taxes, income taxes, capital gains taxes, and other types of state and federal taxes, so you leave less to your heirs.
Trusts and Gifting Strategies
Trusts and gifting strategies are two of the most effective ways to minimize tax liabilities and ensure that more of your wealth is passed onto future generations.
Trusts can provide tax benefits, protect assets from creditors, and ensure wealth is distributed according to your wishes. Gifting strategies, such as annual exclusion gifts, can also help reduce the taxable value of your estate. Your wealth manager can work with you to develop a customized plan that leverages these tools for your family.
Comprehensive Estate Planning
A comprehensive estate plan is essential for transferring wealth according to your wishes. This plan should include a will, power of attorney, healthcare directives, and advanced strategies like charitable remainder trusts or family limited partnerships.
Partnering with a knowledgeable wealth manager in Denver, like Jupiter Wealth, ensures that your estate plan is up-to-date and reflects your current financial situation and long-term goals.
Failure to Plan for Changing Family Dynamics
Families are dynamic, and over time, relationships and circumstances can change. Marriages, divorces, births, and deaths all have the potential to impact your financial plan. Failing to account for these changes can lead to unintended consequences, such as disputes over inheritance or the mismanagement of assets.
Regular Updates to Your Financial Plan
Your financial plan should be a living document that evolves with your family’s continuously changing needs and circumstances. Regular reviews and updates are critical for ensuring that your plan remains aligned with your goals and that any changes in your family’s dynamics are reflected in it.
This might include revising beneficiary designations, adjusting asset allocations, or re-evaluating your estate planning strategies. At Jupiter Wealth, we conduct periodic reviews with our clients to ensure their plans are always current and reflect their wishes.
Creating a Family Governance Structure
Establishing a formal family governance structure can also help manage changes in family dynamics by providing clear guidelines for decision-making and conflict resolution. This structure might include a family constitution, which is a set of rules and policies governing the family’s financial affairs, or the creation of a family council to oversee the management of assets.
A well-defined governance structure helps maintain harmony within the family and ensures that your wealth is managed according to your principles, even as your family’s dynamics evolve.
Why Jupiter Wealth May be the Right Partner for Your Multigenerational Financial Planning Needs
For more than 30 years, the Boon family has offered comprehensive family office services to families nationwide.
At Jupiter Wealth, we understand that high-net-worth families with $2 million or more of investable assets require more than just traditional financial planning. You need a comprehensive, tailored approach that addresses the unique challenges of multigenerational wealth management.
Our financial advisors, located in Denver, offer family office-style services. We ensure you receive the personalized attention and experienced guidance to create a lasting financial legacy.
Whether considering multigenerational planning or looking for ways to refine a current or out-of-date plan, Jupiter Wealth is here to help. Connect with us for an introductory conversation.
