Many people interested in creating multi-generational wealth aim to support their loved ones for many years to come. However, this also means thinking big picture about things like the third-generation curse. By effectively communicating your goals and intentions with your heirs and structuring your estate plan properly, you may be able to help future beneficiaries and generations better approach this process.
The Great Wealth Transfer is happening right now, which means that $84 trillion is expected to pass from baby boomers to most of their loved ones in Gen X, the millennial generation and Gen Z. In the next 10 years, over $16 trillion of this will be moved. However, the third-generation curse may impact how long your legacy lasts by planning for your baby boomer estate plan now.
This refers to situations where wealth that is accumulated by an initial generation is lost by the third generation as a result of poor spending, poor planning and improper management.
This third-generation curse impacts as many as 90% of families with substantial wealth to pass on. When you use a trust to help ensure that wealth lasts, such as adding clauses about how the funds are distributed or milestones someone must reach to access assets, this can decrease the chances of someone spending through much of their inheritance.
Communication and appropriate estate planning structured by a knowledgeable attorney are helpful in this. Even though you may not have created your estate plan yet, consider this your opportunity to work with an estate planning attorney and identify your next steps for communicating these goals. Contact our Pasadena estate planners to get assistance with your planning strategy.
