People ask me this question more than almost any other. How much money is generational wealth? The real answer has nothing to do with a number and everything to do with a team.
Statistically, only 2.3 generations of families ever retain their wealth. By the time grandkids get it, if the trust wasn’t designed specifically and the kids weren’t trained, it’s gone. I don’t care how much money it was. The kids will break it all up.
I’m watching billionaire families right now, here in Northern Nevada, completely decimate generational wealth at the highest level. It’s heartbreaking. I have another family in Iowa, 34 years of generational fighting over a massive estate. Thirty-four years.
Here’s the number that should scare you straight. Seventy percent of families lose their wealth by the second generation. Ninety percent lose it by the third. Very few ever make it to the fourth, fifth, or sixth generation. That’s not bad luck. That’s bad planning.
Why You Need a Wealth Management and Tax Strategy Team
A will gets contested. A will lands you in probate and litigation, and your assets get torn apart by lawyers while your family fights. Trusts are critical, and trust lawyers, I love you, I need you on every client’s team. But most families don’t go far enough.
Traditional wealth management teams take fees and commissions and still don’t teach you anything. You need an advocate who makes this your education, not someone else’s black box. I hear the same heartbreaking line constantly: “I had it set up. I’m not quite sure what my lawyer did to me.”
“You need a team of five to build generational wealth right: a wealth advocate, a tax strategist, a compliance team, a trust lawyer, and the right life insurance.”
I call it the Power Five Generational Wealth Plan. Traditionally, the threshold at which families begin serious estate planning is between $5 and $10 million. At that level, look at how your kids get along as future beneficiaries. If you’ve got four kids with very different temperaments, you might need four separate trusts with four different asset allocations, because what works for one child can wreck another.
The biggest mistake I see is when families blend corporate structure and trust structure carelessly, and the kids take the whole thing down. Or a family has real estate with 2 and 3-percent mortgages from the good old days, and the kids want to sell it off. Debt is transferable and inheritable. You can move the debt and the mortgage right along with the asset. Why would you ever pay off cheap debt like that?
Why Becoming an Accredited Investor Changes Everything
Accreditation is mandatory to access real wealth-building tools. In Canada, you only need to earn $75,000 to qualify as an investor. That’s not enough to call yourself sophisticated.
In the U.S., accredited means you’ve earned $200,000 individually over the last two years, $350,000 as a couple, or you have a net worth of $1,000,000. And when I say millionaire, I mean net worth: assets minus liabilities.
Once you’re accredited, you can invest in gas and oil, aviation, mineral water rights, real estate syndications, RV parks, storage units, and cannabis businesses. Sophisticated asset classes that everyday investors never get near.
Here’s the part most parents miss. Your kids need to be accredited, too, because they’ll inherit the assets. If they can’t legally hold the status required to manage what you built, they’ll be forced to sell or transition it anyway. I’m living this right now with my own kids. My daughter is 18, and my son just turned 25, and they’re looking at a portfolio that spans NFL team ownership, a Broadway play, real estate, and gas and oil. If the kids don’t want to manage it, you need a plan to sell it, exit it, or transition it, because if you leave it to them without your team in place, they’ll get rid of it anyway.
What Women Need to Know About Outliving the Plan
This matters even more for women. Statistically, women outlive their spouses by 8 to 13 years. Men tend to die while still married. Women get widowed, then either manage alone or die with their kids managing for them.
If your trust and team aren’t built to function without you, your spouse, or both of you, you haven’t built a plan. You’ve built a liability waiting to surface.
Start Today: The First Moves Toward Generational Wealth
You don’t need to solve all of this in one sitting, but you do need to start moving this week.
- Get a real gap analysis done on your current estate plan. Find out where the holes are before your family finds them for you.
- Ask whether your trust structure matches how your kids actually get along, not how you wish they got along.
- Find out what it takes to become an accredited investor, and start the conversation with your adult kids about getting there, too.
- Talk to a private banker who knows lenders and can help you preserve, not just grow, what you’ve built.
I have new clients joining me in their sixties, seventies, and eighties, and it’s rarely about them anymore. It’s about ensuring the generation coming in behind them is compliant and that the trusts are actually funded.
The Close
Building generational wealth isn’t about the number. It’s about whether your structure, your team, and your kids can carry it past you. Don’t be the family that makes it 2.3 generations.
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