The ability to manage and preserve a large amount of wealth is not something most people are born with. If it were, then there would be few stories about big lottery winners after a few years ending up with less money than they had before they won millions. Unfortunately, there are many stories like that.
There are also numerous stories about families that once had a lot of wealth that was lost over the generations.
These stories are actually so common that the few families who successfully preserve wealth for generations are considered the exceptions to the rule.
Recently, the Wills, Trusts & Estates Prof Blog discussed ways to make sure your family might be one of the exceptions in "Preparing Heirs for Successful Wealth Stewardship."
The key to such success actually seems relatively simple. In practice, however, it can be difficult.
Heirs need to be trained to handle the wealth.
They need to know how to make good investments and how to avoid bad ones. They also need to learn what good uses for the money are and what type of spending would be wasteful. If you have a family business they’re taking over, they need to know how to continue running it.
Perhaps, most importantly, heirs need to know who to turn to for advice.
A good estate plan is also vital to preserving family wealth.
The wealth cannot be maintained without the proper legal instruments, but estate planning is not enough by itself.
Reference: Wills, Trusts & Estates Prof Blog (June 29, 2017) "Preparing Heirs for Successful Wealth Stewardship."