There is little doubt that an ever-increasing amount of America’s total wealth is being concentrated in fewer and fewer hands. Many wealthy people are amassing large fortunes that could potentially pass down through their families for generations.
This “generational wealth” has the potential to make some families wealthy for hundreds of years.
However, we know from history that rarely actually happens. Most of the time, the wealth dissipates after a generation or two, even if we do remember the exceptions where that did not happen.
If you are someone who is going to receive an inheritance of generational wealth, then you need to know how to make sure that you are one of the exceptions that preserves the wealth.
Financial Advisor recently discussed in this challenge “These 5 Mistakes Destroy Generational Wealth.”
Things to avoid doing include:
- Do not spend recklessly as soon as you get an inheritance. Buying all your dream items is not a good idea immediately after receiving an inheritance.
- Do not think you can handle the assets without receiving proper financial advice.
- Take your time to make a plan about what to do with the money. There is no need to act right away.
- Make sure that you are not paralyzed by all of your investment options. You should not act right away in a rush, but you do need to act eventually.
- Avoid giving to every friend or family member with a hand out at your expense.
These tips are important whether you are receiving a “large” or a “small” inheritance. Contact an experienced estate planning attorney who can help you form a team of advisors to help guide you to prudent decision-making.
If you are the person passing on the wealth, you should meet with an experienced estate planning attorney to make sure your wealth isn’t squandered by your beneficiaries. You can create an estate plan that will make sure the assets you pass on will take care of your beneficiaries while also protecting them from themselves.
Reference: Financial Advisor (May 23, 2017) “These 5 Mistakes Destroy Generational Wealth.”