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How to Protect Generational Wealth Properly

Posted on December 31, 2024February 3, 2025 by Foundation for the Future

We all strive to build a nest egg for retirement and must work hard and smartly to produce it. Beyond our immediate and future financial needs, if we can leave money to the next generation, we will have helped to take care of them in the future after we have passed on.

Building generational wealth is not easy, but preserving it is even harder. It has been said that the first generation builds it, the second generation spends it, and the third has none. While a reality for some families, you want to ensure your wealth not only transfers to your children and beyond but also grows.

Fortunately, there is a way to achieve it. This is how to protect generational wealth.

What Is Generational Wealth?

Being wealthy means having more financial resources and assets required for your present and future expenses. Generational wealth takes it further and provides enough money for more than one generation. This wealth accumulation will provide for your children and, hopefully, their children.

Family Office

A family office is a private investment firm dedicated to the growth and preservation of individuals and families with ultra-high net worth. They offer a wide selection of financial services, planning, advice and concierge services for a comprehensive care suite.

To protect wealth, they educate the next generation and simultaneously manage their assets and investments. This often involves:

Lifestyle Management

Their services go well beyond money as they can take care of travel planning, personal security, charitable giving, assessing personal and business staff, and more.

Legacy Planning

This involves managing the complexity of wealth transfer through estate taxes and laws, family trusts, ongoing support for philanthropical endeavours, the transfer of business interests and general family governance.

Family Wealth Education

To prepare the next generation, a family office is there to educate family members on how to manage their wealth and align with the family’s interests and values. They are assisting in the continuance of the legacy, and they must teach the value of money and appreciation of how it was attained so children will retain their wealth and pass it along themselves.

Investment Management

The family office is responsible for managing the assets and investments held by the family, including property, stocks and other holdings.

Astute Financial Planning

Building assets and investments takes dedication, skill, and an acceptable level of risk, and for that accumulation of wealth to survive in the long term, you need to train those who will be its custodians.

Your children need to understand the assets and investments so they don’t make poor decisions in the future. You should lay out a roadmap for them to follow because it can be daunting for an unprepared recipient of wealth, and this guides them and outlines how money should be managed and invested for future generations.

Professionals like estate planning attorneys and financial planners will be there to guide the next generation and manage your portfolio to preserve your wealth. Expose the next generation to your holdings and family financial matters so they understand what is at stake and how they can make a positive contribution before fully controlling it.

Investment In Real Estate

There is no shortage of places to invest your money, and the stock market is popular. Cryptocurrency is also attractive because it is new and volatile, and both investment vehicles can help accumulate wealth.

Beyond the numbers and percentages on a screen, there are tangible assets you can buy and hold to create wealth. Among them is real estate. Buying property is a smart way to safeguard your wealth and protect a family from inflation. You can invest in different types of property like:

  • Land
  • Commercial buildings
  • Residential housing
  • Industrial properties

Owning property not only holds money and goes up in value, but it also can provide passive income through leasing and rentals. They are not making any more land, so it becomes more valuable over time and can be leveraged to borrow for additional investments as well.

Other Tangible Assets

Other types of assets traditionally have been used to accumulate and hold onto wealth. This includes:

  • Artwork
  • Gold
  • Silver
  • Jewelry
  • Vintage wines
  • Coins
  • Stamps
  • Antique cars
  • Rugs

This is wealth preservation and speculation combined, and most tangible assets already have value when you acquire them and have the potential to grow in value over time. They also give personal enjoyment to the generation that bought them and are a family heirloom to be preserved.

This is how to protect generational wealth. It is a balance between holding on to the right assets that grow and provide income while making new strategic investments to fund the family’s long-term pursuits. Ultimately, having the right financial team is the key to long-term wealth preservation, and a family office is ready to assist financially affluent people.

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