Building a Legacy Beyond Wealth

The successful way to transfer wealth, and more than just wealth

It’s been reported millennials are “ill-prepared to manage wealth,” often getting caught up in stereotypes like their avocado toast habits.

This has led to concerns among many mature and wealthy people about passing on wealth, and these concerns aren’t just limited to millennials. A study of wealthy American families from the mid-1980s revealed a staggering 70% lose their wealth by the second generation and an alarming 90% by the third.

Let’s take a closer look at how we can break this cycle to create a legacy that transcends mere finances.

The Third-Generation Curse

The third-generation curse is a troubling phenomenon where wealth amassed by one generation tends to dissipate by the third – the grandchildren. This pattern is often attributed to a combination of factors, including a decreased understanding of the value of money, the erosion of family values centred around wealth creation, and a lack of preparation for inheriting significant sums.

1st Generation - Wealth Builders

The first generation works hard to accumulate wealth, often starting with modest means and growing their assets through diligence and financial prudence. They may not have inherited material possessions but were likely passed down something more valuable: values and ethics. Any fortune amassed by this generation represents years of effort and careful management.

2nd Generation – Caretakers

The second generation, having witnessed their parents' sacrifices, adopts frugal habits and makes considered decisions to enhance financial stability. They responsibly manage and nurture the family wealth they may have seen their parents work so hard to establish.

3rd Generation - The Challenge

The third generation may lack the firsthand experience of building wealth, which can lead to complacency and a risk of squandering the family legacy. Without a deep appreciation for the sacrifices involved, they might struggle to sustain or grow the family’s assets.

Redefining Wealth

Your kids don’t need your money, they need something much more valuable.

There are plenty of other legacies you might hope to pass on. Here are a few examples.

Generational Ambition/Drive

Generational ambition is the force that propels a family forward, transcending the limitations of a single lifetime. It drives the desire to achieve and surpass the goals of previous generations, building on their successes and learning from their failures. This ambition isn’t just about accumulating wealth; it’s about fostering a relentless pursuit of growth, innovation, and impact. By instilling this drive in each generation, a family ensures that its legacy continues to evolve, adapting to new challenges and opportunities while maintaining a clear vision of long-term success.

Generational Values & Principles

This is the moral compass that guides a family's decisions and actions. These values and principles are the core beliefs and standards passed down through generations, shaping the family's identity and character. They provide a bedrock for building relationships, making ethical choices, and contributing positively to the world.

By consistently upholding these principles, a family ensures that its legacy is rooted in more than just material success.

Generational Work Ethic

A strong generational work ethic is the cornerstone of sustained success and legacy building. It embodies the commitment to hard work, perseverance, and continuous improvement that is passed down from one generation to the next. This ethic goes beyond simply working hard; it encompasses a dedication to mastering one's craft, seeking excellence in every endeavour, and embracing challenges as opportunities for growth. By cultivating a robust work ethic across generations, a family ensures that each member understands the value of effort and persistence, which are essential for long-term prosperity and fulfilment.

Generational Gratitude

Generational gratitude is a profound appreciation for the blessings and opportunities received, as well as the sacrifices made by previous generations. It's a recognition of the interconnectedness of family members and the importance of giving back. This mindset cultivates humility, empathy, and a strong sense of community.

Generational Faith

Generational faith is the enduring belief in something greater than oneself, whether it be spiritual, philosophical, or a deeply held conviction, such as a commitment to the local community. This faith provides a sense of purpose and direction, helping each generation navigate the uncertainties and challenges of life. It instils resilience, offering a source of strength and comfort in difficult times. By passing down this faith, a family ensures that its members are anchored by shared beliefs and traditions that transcend individual lifespans.

Generational Commitment to Family

Generational commitment to family is a deep-rooted devotion to the well-being and happiness of family members. It’s a promise to support, protect, and cherish one another through thick and thin. This unwavering loyalty creates a strong sense of belonging and provides a secure foundation for individuals to thrive.

Financial Planning for Wealth Transfer

In addition to open communication and shared values, meticulous planning is essential for a successful wealth transfer. Careful consideration of logistical details ensures a smooth transition and helps protect your family's legacy.

Family Dynamics

Modern families are constantly evolving. Relationships form and dissolve, children are born, and loved ones pass away, all of which can complicate your wealth management strategy. It's crucial to anticipate these changes and safeguard your wealth plan accordingly.

Asset Protection and Structuring

The choice of how assets are structured can also impact protection and succession:

• Incorporating assets into a company structure can provide flexibility in transferring ownership through share transfers.
• Family trusts can ensure assets are inherited by specific beneficiaries with greater certainty.
• Holding assets within a corporate structure may lower tax liabilities compared to individual rates however, tax efficiency should never be the primary consideration for any structure.

Have a Top-Tier Team

Building a strong wealth transfer plan requires a skilled team. Lawyers, accountants, and financial advisers (including the team here at Become Wealth) are invaluable partners in navigating complex family dynamics and legal landscapes. By proactively addressing potential challenges, you can protect your legacy and ensure a smooth transition of wealth across generations.

The Bottom Line: Building a Legacy Beyond Money

What your children need isn’t just money. They need your fire, dedication, faith, and commitment to excellence.

Remember, your legacy is about creating a narrative that extends beyond your lifetime - a story of growth, unity, and shared values. By taking proactive steps in wealth transfer planning and prioritising family dynamics, you can ensure that your hard-earned wealth serves as a catalyst for continued success and happiness for generations to come. Let’s rewrite the narrative together.

It would be the pleasure of one of our trained professionals to help you work through any of the topics mentioned above, so get in touch today.