When people think about leaving a legacy, they often think of the inheritance they will leave behind. Yet, as Brian Weiner, founder and CEO of the Family Office Resource Group pointed out, there’s much more to a legacy than financial aspects.
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“A legacy is how someone wants to be remembered by their family and their community,” said Weiner. “Your values and more importantly, your deeds, are what define a legacy.”
For high-net-worth individuals and their families, legacy planning is a powerful tool to ensure that wealth is not only sustained but meaningfully transferred across generations. By instilling financial stewardship, encouraging philanthropic engagement and fostering value-driven education early on, rich families can avoid the common pitfalls that lead to the erosion of wealth.
Keep reading to find out more about how high-net-worth families can build lasting legacies that preserve both financial assets and the principles that define them.
Why Legacy Matters in Wealthy Families
Whatever your income level, it’s never too early, or too late, to begin thinking about your legacy. But for high-net-worth families, discussions of legacy carry even more weight. Financial experts have discovered that, in cases where parents impart the importance of a legacy to tweens and teens, these younger generations are more equipped to manage familial wealth when they reach adulthood.
In essence, educating children about their legacy and empowering them to choose causes they care about can help wealthy families dodge the “third generation curse” — a financial phenomenon in which families lose their accumulated wealth by the third generation. This often happens when younger family members are not adequately prepared to manage wealth or understand its significance.
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How To Teach Children About Building a Legacy
Kevin Reed, chief revenue officer for Aquilance, said that parents can begin teaching children about the family legacy at a young age.
“I think you can start introducing the concept of legacy as early as your child can have conversations with you. Children can learn about family history, the things their family values and how their actions today can impact future generations.”
Reed used the example of his daughter, who learned to love the word “more” as a toddler.
“She’s not unique in that regard,” said Reed. “We have to teach our kids to be content with what they have and actively find opportunities to help others. Early exposure to charitable giving cultivates empathy.”
Weiner agreed with Reed, saying, “This is a great opportunity for parents to engage with their kids… Nurturing interest in charitable donations is incredibly important. It teaches independence and that their opinions matter.”
“Understanding the importance of financial stewardship can motivate them to make wise financial decisions throughout their lives,” Reed added. “Viewing money as a tool for impact also fosters a much healthier relationship with finances overall.”
According to these experts, the financial lessons taught to children can have a lasting impact that can help preserve wealth in the third generation and beyond.
Final Take To GO: Building Financial Wellness Across Generations
Building and maintaining a legacy isn’t just about protecting assets; it’s about empowering future generations to use those assets wisely. Here are some ideas of how you can build financial stewardship within your own family:
- Create a family mission statement: Define shared values and goals.
- Hold regular family meetings: Discuss financial plans, charitable initiatives and business interests.
- Establish trusts and governance structures: Ensure clarity and accountability in wealth management.
- Work with advisors: Partner with family office experts, estate planners and financial educators.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: How High-Net-Worth Families Can Preserve Generational Wealth
