You've worked hard for many years to build a successful business. With this, you've amassed a great amount of wealth. The question to ask is whether you should simply leave it to your kids like the Vanderbilt family, or should you be more deliberate like the Rockefellers?
How do you turn a successful business into a financial legacy that will empower your family for generations to come?
If you know your American history and the story of the Vanderbilts and the Rockefellers, you will recall that centralizing your wealth in a carefully planned trust is the best way to perpetuate, preserve, and protect your wealth. Compare the two historic families: the Vanderbilt fortune has been spent, while the Rockefeller fortune is still being enjoyed—six generations after John D. Rockefeller built it.
Forbes, in "How to Create a Family Trust to Empower Your Great-Great-Grandchildren," reports that some families invest substantial time and energy into designing a financial legacy with the assistance of a qualified estate planning and asset protection attorney. He or she can help create a plan that will empower children and grandchildren, as well as generations thereafter. Preserving and protecting financial wealth requires a sound understanding of, as well as a solid plan for, counteracting the three primary forces that erode wealth over multiple generations. The three forces are:
- The division of assets among the generations;
- Transfer taxes and capital gains taxes; and
- Business risks and third-party attacks.
Studies have shown that as a result of these forces, financial wealth often doesn't last beyond the third generation in 90% of high-net-worth families. It takes careful planning to make wealth last. Talk with a qualified estate planning attorney so that your estate endures more like the Rockefellers than the Vanderbilts.
Reference: Forbes (December 23, 2015) "How to Create A Family Trust to Empower Your Great-Great-Grandchildren"