You’ve worked hard your entire life to attain financial success. What happens next?
While achieving financial security can often feel like the end goal, it’s crucial to think about the future and what will happen to the wealth you’ve generated in the years to come. A strong estate plan is one way to accomplish this sense of security.
Many high-net-worth individuals currently find themselves in this position. In what’s known as the “Great Wealth Transfer,” a total of $84 trillion in assets are set to be passed down in the next two decades, mainly from the baby boomer generation to their descendants.
At Peak Financial Group, we work with high-net-worth clients to develop estate and succession planning strategies that are designed to keep your finances on the path of success. Here are four benefits of estate or succession planning strategies.
Breaking the “Cycle of Wealth”
In financial circles, there’s a theory about the “cycle of wealth” — the first generation builds wealth, the second maintains it, and the third squanders it.
Why does this happen? One explanation is that by the third generation, family members have grown up with wealth but haven’t experienced the struggle that comes with building it. Without planning and financial education, this third generation often ends up squandering a family’s hard-earned wealth. Estate plans properly drafted by your attorney in conjunction with a financial plan can help break this cycle.
Preparing Heirs
An estate planning strategy should be designed to help descendants of high-net-worth families make sound financial decisions. For instance, funds can be placed in a trust and doled out over time according to a specific plan, which helps ensure that money doesn’t get spent too quickly or irresponsibly as it’s passed from generation to generation.
Providing Education
Education is a key component of any estate planning strategy; without it, wealth-preservation tools like trusts can feel more like restrictions rather than prudent financial strategies. An estate planning strategy can play a valuable role in helping to protect wealth by teaching families and their different generations about how to make smart investments and manage their money.
Eliminating Conflict
Money is often a source of conflict in families, and battles over inheritance can pit loved ones against each other. The earlier the plan is devised, the more involved the entire family can be throughout the process, building buy-in and reducing the risk of conflict.
As avid hikers, we know that the journey doesn’t really end when you reach the summit. Get in touch with us today to learn more about how to make an estate planning strategy work best for your family and its future.
Securities and investment advisory services offered through Osaic FA, Inc., member FINRA/SIPC. Osaic FA is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic FA. Osaic FA, Inc. and its representatives do not offer tax or legal advice. Individuals should consult their tax or legal professionals regarding their specific circumstances.
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