There are two different mindsets among those who earn a healthy salary and are building wealth with time. Many consider and work towards leaving a financial legacy for their children. This includes making sure their children will have the opportunity to go to college and be able to buy a house. The other type of mentality is “If I built wealth on my own, my children can do it, too”. There’s nothing wrong with either approach, but it’s important to remember that the world has clearly changed and will continue to change. 20 years ago, house prices were at least 5 times lower than they are now. College tuition was also more affordable too. With each passing generation, it becomes harder to accumulate wealth. So, if you have been able to build some wealth yourself, maybe you can use it as a foundation to give your children an extra push in life. You can be the change in your family to promote a different mindset for future generations. Here are some tips to help guide you on the path of passing down generational wealth.
Create a Strong Sense of Family Unit
Help your children understand that either they are all successful, or they’re happy that the other is successful. This will decrease the chances that each kid will go off on their own, and misuse what was passed down to them.
Tell Your Story
Let your children and your grandchildren know how much you sacrificed to be able to acquire all that you have, and how much of your own sweat comes with the assets you will be leaving. What comes easily, usually goes easily. So, make sure they understand the sacrifice you made to acquire it all and to keep it in order for them to have access to it too.
Create a Solid Structure
Furthermore, creating a solid structure means having all the legal matters set up correctly, including your will. This includes creating the right type of trust for your situation. Even though your kids may be great people and you trust them completely, they might marry people who end up not having the same ideas and principles. If that’s the case, having a trustee, for example, will prevent a spouse or ex-spouse from ruining what you’ve built.
Plan the Succession for Your Business
If you are a business owner, aside from teaching the business to your children, it’s important you prepare your successor, or each child for taking on different roles in the business if they desire. This is an ongoing process. Just as you didn’t create a successful business overnight, your children will not be ready to lead it successfully overnight.
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