Skynesher/Getty Images
Being in a position to financially support our children is one of our greatest privileges. Passing wealth down through the generations is a way to provide them with peace of mind long after you’re gone. However, this capital transfer should not be taken lightly.
Trending: Warren Buffett’s 10 genius things to do with your money
For you: 6 subtle genius moves every wealthy person makes with their money
GOBankingRates spoke with Stoy Hall, Certified Financial Planner (CFP) and CEO of Black Mammoth, to discuss how to prepare your children for generational wealth. “Are you worried that your children will be the next in the ‘Rich Kids Runaway’ headlines?” he said. Let’s take a closer look at three innovative strategies to ensure your wealth is a launching pad rather than a crutch. ”
Read his insights on intergenerational wealth inheritance.
Trending: Want to retire rich? Suze Orman says she’s missing this key money movement
education is the foundation
“First and foremost, every family should have a family meeting, whether they have a lot of money or not,” Hall said.
He suggested that these family meetings should be held monthly and noted that family meetings are important for several reasons. “It brings families together and makes them understand that there is only one goal to achieve. That is transparency and education to children, because children ask questions.”
To achieve this, open communication is essential. “You have to be able to educate your own children. Don’t rely on school or social media,” he said. “And we will explain what we are doing and why we are making this decision.”
As with any big event or financial decision, these should be discussed as a family, he said. Hall used his own personal life as an example.
“Our family goes to Hawaii for two weeks every June. Next year it won’t be. So we explained to the kids why,” he said. “Why? Because I’m going for Christmas this year. And I think your sport is becoming more and more cloudy during the trip, so it costs even more.”
His conclusions regarding education are: “Children are sponges. They need to know. They want to know. And if we as parents don’t teach them, what are we doing?”
Next article: I am a self-made millionaire: 6 steps I took to become rich on an average salary
Build a trust for future-proof wealth
Hall recommended creating a trust designed for future generations. “And I don’t just mean your children. Your children’s children, and their children’s children, and create a true generational wealth situation.”
story continues
He also noted that parents can choose trust provisions. “You can put strings on it, right? Hey, the trust will only give you X dollars in income every year until you’re 30. At 30, you’ll get more income, at 40, you’ll get more income, and at 50, you’ll get more income. Your income will increase.”
Hall continued, “When you get married, the trust pays for your wedding and college expenses, and when you get a full-time job, you get X amount of dollars.”
He added that the goal of the trust is to give children access to a variety of ways to help with their training and education, rather than giving them a chunk of money that simply goes to waste.
Building a team — the family office approach
“You need a team behind you,” Hall said. “This is a team you can trust.”
He added, “At Black Mammoth, we’re a modern family office. So we think every family should have a family office within their unit. We’re giving lawyers, accountants, insurance advisors, etc., all these scenarios. We will have a trusted big picture and comprehensive person in place to help us execute and manage.”
Hall noted that there are long-term benefits to having access to this type of team. “That way, when you pass away and your kids take over everything, they already have a built-in team that they’ve known all their lives and can trust to help them make the right decisions to continue doing what they want to do.” I have it. Don’t get caught up in this inheritance and love it.”
conclusion
“It’s all about educating,” Hall advised. “Design some kind of trust family office for yourself, build a team that will be with your children and family the whole time, and the wealth that will be passed down through the generations will continue to grow and continue to grow.” We can continue to do so.”
GOBankingRates Details
This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 3 Ways to Prepare Your Children for Generational Wealth
