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Help the Next Generation

Passing along a financial legacy to the next generation may ultimately benefit many future generations of your family — but only if your children become conscientious stewards of the family’s wealth.

By sharing your values as well as your money, you can pass along a priceless legacy that may help preserve your family’s prosperity for years to come.

Open Communication

Transferring your knowledge and values generally takes more than just being a good role model. It also takes clear communication about your financial goals, priorities and expectations. Family discussions can provide a forum for talking about the legacy you wish to leave behind, while giving your children an opportunity to ask questions and voice their concerns. Explaining your estate and wealth transfer plan can prevent misunderstandings and reduce the potential for resentment, especially if your plan calls for an unequal distribution of assets among your beneficiaries or if a large portion will go to charity.

A multi-generation family posing for a photo.

Stewardship Policy

Defining your own position on money management, debt and charitable giving can help you create a stewardship policy that you can communicate to your children. Beginning this process when they’re young makes it more likely that you’ll successfully instill in your children the values that are important to you. If one of your goals is to discourage debt, for example, you might make it clear to your children that you will not come to their rescue if they spend beyond their means. A stewardship policy could also describe your expectations for using the family’s wealth for humanitarian and other charitable purposes.

The Incentive Trust

Inheriting significant wealth brings significant responsibility. If you have concerns about your family’s ability to properly manage or preserve the assets that will eventually pass to them, you may want to include distribution restrictions in your estate planning. An incentive trust offers an opportunity to reward desirable — and discourage poor — behavior and promote the values you cherish.

An incentive trust arrangement can help build character in your children and secure their financial independence by encouraging education, philanthropy, a healthy lifestyle, a solid work ethic, or any number of other things that are important to you. It also can ensure that the wealth you may have worked hard to build will be preserved for future generations of your family.

Since it’s impossible to predict the changes that may occur over time, consider building sufficient flexibility into your trust document to allow the trustee broad discretion in carrying out the trust’s provisions.

Passing along your wealth and your values to younger generations is a worthy goal. Good communication and appropriate planning can help you achieve it.

Notices & Disclosures
Article is adapted from content provided by DTS.

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