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Are You Successfully Planning for Your Heirs’ Wealth?


For many of us, discussing money can feel uncomfortable – especially with kids or grandkids. This can lead to unexpected and unfortunate results. For example, according to this TIME article, 70% of wealthy families lose their wealth by the second generation. Then, by the third generation, 90% of wealthy families lose that wealth.

That is why we are addressing ways to successfully plan for your heirs’ wealth, so you can feel confident in the future and your desired legacy.

Ask: What makes up your wealth?

It’s easy to misunderstand what makes up one’s wealth. We think: “We own our home, this many cars…” but then may forget to include other factors, like inheritances.

Make a list of everything that really does contribute. Also remember to think about what is and isn’t fully yours. For example, if you co-own property with family, that should not be counted as wholly your own.

Understanding the overall picture of what you have will allow you to plan most effectively.

Decide: How much do you want your children and/or beneficiaries to receive?

We understand this answer may not feel comfortable, and that’s okay. But it’s important to ask this – and start thinking about it carefully. Do you foresee your heirs receiving everything? Getting half – and the other half be designated for charity? Or another portion altogether?

If donating to charity, there already may be a nonprofit or organization – like an alma mater – you have in mind. If you’re still deciding, we have a resource to help: 6 Things to Look For When Choosing a Nonprofit to Support.

Talk: Have conversations with your children and beneficiaries

Because many of us feel uncomfortable talking about money, we don’t. This is very common, especially if we have a significant wealth. As cited here, 64% of high net worth individuals have admitted sharing very little (or nothing) about finances with their children.

Unfortunately, this lack of communication can be damaging. As parents, we have an obligation to educate our children. If they do not understand the wealth they may receive one day they may be unprepared to use it as we’d hope. (Here is an example. According to this statistic, the average recipient of a grand inheritance buys a new car within just 19 days.)

Managing money and being philanthropic are not generally intuitive; they are learned actions. That’s why we encourage people to:

  • Share how the family wealth was made, so heirs can understand their family background and where it came from.
  • Discuss values with kids and grandkids, so there can be a rooted connection built in philanthropy. It’ll help them learn why and how giving back is important.
  • Share with your family how you decide how much of your wealth to allocate to philanthropy. You can also share when you started giving back, the types of projects you support, any other information you’ve learned along the way that will make them better philanthropists.
  • Hold guided, honest discussions about what to expect. Will your heirs be able to use the money how they see fit, will there be an expectation to continue funding projects you had previously supported? Sharing this information ahead of time will allow them to be ready to receive the money and they’ll be more likely to steward the funds as you’ve envisioned.
  • Involve your heirs now. As mentioned, philanthropy is a learned action. Bringing your heirs into the conversation now will allow them to see the decision-making process and have a voice at the table. Whether you decide on a family project together or give them a small amount to designate on their own, they can begin to learn how to research nonprofits and decide which programs to fund.

You have a vision in mind, and if you have open conversations with your heirs – they can feel rooted in sharing that vision and putting it into action.

We are here to be a resource for you, too. If you would like to discuss your philanthropy or get help deciding on a nonprofit to support, please give us a call at 858-756-6557.