One of the more important — and often overlooked — components of wealth planning is preparing the next generation to receive it. Many successful families spend decades building their wealth, only to pass it along without preparing the recipients to manage it. The result? According to some studies, 70 percent of wealthy families lose their wealth by the second generation, and 90 percent by the third.
Building a lasting legacy requires more than smart investing and comprehensive tax strategies. It requires intentional wealth transfer strategies and generational support, providing your beneficiaries, particularly children, with the education, experiences, and values they need to become responsible stewards of wealth. Like supporting your children through school, sports, and other activities, financial parenting is crucial to their development.
The Myth of the “Right Time”
Many parents hesitate to discuss money with their children, unsure of when or how to begin. But waiting for a “perfect” moment can backfire. Kids often form beliefs about money long before parents realize they’re paying attention. Even young children observe your spending, saving, and charitable habits. By the time they are teens, they’ve likely formed opinions — whether guided or not — about what money means in your household.
The goal isn’t to overwhelm them with complexity or share every technical detail. It’s to provide age-appropriate transparency and guidance over time, so your children learn to view wealth not just as an opportunity, but also as a responsibility.
Building Financial Literacy and Values
As a starting point, we help clients develop a framework for financial education rooted in both practical knowledge and personal values. Here’s how we encourage families to begin the process, particularly for children still living at home:
Start with Basic Literacy
Children need to understand core financial concepts before they can manage real assets later in life. Topics to introduce over time include:
- Basic budgeting and cash flow
- Introduction to credit and borrowing
- Investing basics
- The difference between income and wealth
- General understanding of taxes
Learning can start as early as elementary school with allowances or goal-based saving, then progress to more complex topics in the teenage and college years.
Introduce Stewardship Early
Stewardship is about managing wealth for a purpose greater than consumption. Whether it’s giving to charity, investing in future goals, or preserving wealth for future generations, stewardship provides a meaningful framework for financial decision-making.
Creating such a structure encourages children to think more about the collective good so they can see and understand the value of helping others. These lessons don’t have to be taught using their own money; rather, they might participate in your decision-making and observe what goes into the process in the following ways:
- Set up charitable giving funds or donor-advised funds that the kids help determine how to manage
- Involve them in volunteerism or family giving decisions
- Talk with them about how investments can align with family values
This reinforces that wealth is a tool that can be used not only for financial security but also to support causes important to your family.
The Role of Intentional Conversations
We work with many families to facilitate structured conversations around money, values, and expectations. These discussions often include:
- What is the purpose of our wealth?
- What legacy do we want to leave (financial and otherwise)?
- What role will each family member play in future decisions?
- How will we define success across generations?
Many of these discussion points are the same as those we have with clients when helping them to understand their personal definition of financial success — a discovery phase that helps us, and the client, to recognize their lifestyle preferences and long-term goals. Similarly, these are not one-time conversations. They evolve over time and should reflect changes in your family, business, and vision. Creating space for dialogue fosters trust, unity, and shared understanding.
Creating Real-World Experiences
Nothing replaces real-world experience, such as giving your children the opportunity to make financial decisions with real stakes and real lessons — with guidance, of course. Then, you can allow them to track the results of those decisions. Some ideas include:
- Matching their savings toward a purchase or investment.
- Including children in the decision-making discussion for their custodial accounts.
- Involving older children in discussions of philanthropic or investment capital.
- Including them in conversations about family business operations or board meetings.
These experiences build confidence and competence, and they help all parties identify where more guidance may be needed before a larger transfer of wealth occurs.
Preparing for Inheritance: Trusts, Roles, and Expectations
When it comes to inheritance, the vehicle matters as much as the message. We help clients structure inheritance strategies that promote financial security, literacy, and accountability.
Tools that can be used include:
- Incentive trusts that encourage education, entrepreneurship, or philanthropy
- Staged distributions to reduce the risk of poor decisions in early adulthood
We also help define the roles and responsibilities of heirs:
- Will they serve as trustees or beneficiaries?
- Are they expected to participate in family meetings or business decisions?
- What safeguards are in place to protect them (and the family wealth) from outside influence?
These conversations — while sometimes difficult — are critical to ensuring the smooth transition of both assets and values across generations. We are here to help, as a well-thought-out estate plan can not only help protect assets and mitigate taxes but also reflect what’s most important to you.
How Slaughter Associates Supports Generational Wealth
Achieving financial success for yourself and your children requires more than a well-crafted plan alone. It also requires a trusted partner who can skillfully execute and adapt that plan as your life evolves. Through a process we call True Wealth Management, we help integrate financial planning with personal, family, and legacy goals, providing a comprehensive view of your financial world and all its moving parts. As it relates to generational support, this means:
- Custom financial education plans tailored to each family’s values, ages, and levels of financial experience
- Facilitated family meetings to discuss legacy planning, wealth transfer, and shared goals
- Investment strategies aligned with generational stewardship — whether that includes trust management, philanthropic giving, or family business succession
- Ongoing communication with all generations to support healthy financial habits and aligned expectations
Wealth is a gift — but also a responsibility. Parenting the next generation to manage, preserve, and grow that wealth requires more than financial documents and investment accounts. It requires mentorship, communication, and shared purpose.
As your wealth management partner, Slaughter Associates will help you navigate the financial, emotional, and relational aspects of wealth transfer with clarity and care.