Building & Preserving Intergenerational Wealth: Key Strategies

Intergenerational wealth establishes family legacies that stand the test of time. By growing wealth strategically, families can build assets and investments that appreciate, enhancing their financial freedom and resilience against economic downturns.

However, creating and maintaining intergenerational wealth requires thoughtful planning, strategic execution, and ongoing financial management.

Blueprint for building intergenerational wealth

Building intergenerational wealth is a long-term commitment that needs strategic planning and decision-making, including:

• Diversifying your investment portfolio across various asset classes, such as stocks, bonds, real estate, and alternative (private) investments. This creates opportunities for higher returns, safeguards against market downturns, and leverage gains from varied sectors. A diversified portfolio is pivotal to financial stability.
• Creating a detailed estate plan for asset distribution, tax minimization, and asset protection.

Empowering the next generation with financial literacy

The next generation can’t prepare for what’s coming if they are financially illiterate. Prepare them with the basics (“hard work…delayed gratification…”) and then help them understand the world of investments, the magic of compound interest, and the importance of diversified portfolios.

Addressing challenges in intergenerational wealth transfer

Intergenerational wealth transfer is complicated. Or, at least, it can be if you aren’t sure about the challenges you are walking into.

• Tax and legal considerations: Professional guidance from estate planners, tax advisors, and attorneys can help minimize tax liabilities and ensure legal compliance during the intergenerational transfer of wealth. Being mindful of Estate Tax Laws and anticipated changes to estate tax exclusion and exemption limits (See Tax Cuts and Jobs Act) will help ensure the planning you do today optimizes the transfer of wealth to future generations. Also, trusts and proper estate planning will help ensure a tax-efficient transition of family assets to support the intended causes and people.
• Family dynamics and conflicts: You don’t have to watch “Succession” to know that family dynamics and finances can be fraught. Open communication, family discussions, and a clear plan can help manage these issues. Having a clear shared understanding of the “how and why” behind wealth transfer and the wishes of the generation passing along assets is critical for avoiding ambiguity and conflict down the road.
• Smooth transition of assets and values: Wealth transfer isn’t just about assets but also values, beliefs, and principles. It’s important to involve the next generation and educate them about the family’s wealth and responsibilities. Honoring the impact and legacy of the previous generation is an essential element of good stewardship for family wealth. Supporting the organizations or causes most important to the previous generation is a great way to ensure that a family legacy lives on, whether as a sustained commitment to give time and resources or as a function of a structured trust or pledged giving account.

Leveraging intergenerational wealth for a more significant impact

Leveraging intergenerational wealth for greater impact involves strategically using family assets to create lasting positive change. Philanthropic endeavors are a cornerstone of this approach, allowing families to support causes they are passionate about and instilling a culture of giving within future generations.

With more than 1.5 million non-profit organizations in the United States, finding a charity that aligns with your vision and operates at a high level can be difficult. Brighton Jones’ Philanthropic Advisory services increase your impact by aligning your wealth and time with your values, passions, and purpose.

Leveraging intergenerational wealth for more significant impact involves combining philanthropy, legacy creation, and social impact to ensure that family wealth contributes to the greater good across generations.

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