How the Ultra-Wealthy Set Their Heirs Up for Success: Lessons for Your Legacy
As wealth advisors, one of the most meaningful conversations we have with our clients centers around their wealth and heirs' future. For families with significant assets, this is not just about transferring dollars and cents—it's about passing down values, responsibility, and legacy.
For those with $25 million or more in net worth, the challenge isn't just about accumulating wealth but ensuring it's used wisely by the next generation. Recent studies reveal that 77.5% of ultra-high-net-worth individuals worry their heirs might squander the wealth they receive. This concern is very real, even for the wealthiest families. How can they, and perhaps you, ensure that wealth becomes a tool for success and not a burden?
Building a Legacy: More Than Money
The ultra-wealthy have adopted an approach that goes beyond simply passing down assets. They focus on instilling a sense of responsibility and aligning wealth with family values. Nearly 85.8% believe it is crucial to leave behind more than just financial assets—they want to leave a legacy of values, morals, and philanthropic vision.
You, too, can adopt this strategy. The key is understanding that legacy planning is personal and multifaceted. It's about what you stand for, the values you want to be remembered, and the lessons you wish to impart to your heirs. This means starting early and having ongoing conversations about money and how it can be used to achieve personal and family goals.
How to Instill Financial Responsibility in the Next Generation
Creating a legacy goes hand in hand with ensuring your heirs are prepared to manage and grow their inheritance. Here are the strategies ultra-high-net-worth families employ—and that you can too:
1. Inspire a Wealth Agenda: Help your heirs to understand the power of their future wealth. Instead of focusing on the technicalities of legal structures or complex investments, focus on the broader impact their wealth can have. Whether supporting family needs, making a difference in the community, or funding more significant initiatives, they must see wealth as a tool for positive impact. A trusted wealth advisor can guide this process, helping your heirs define their financial goals and align their wealth with their values.
2. Open the Lines of Communication: Regular discussions about money and values are crucial. Many families shy away from these conversations, fearing they must disclose their net worth. However, talking about the responsibility of managing wealth and the values behind it does not require you to share specific numbers. Start by discussing basic principles, such as balancing spending with saving, and gradually move to more sophisticated topics as your heirs mature.
As the old saying goes, repetition is key. Reinforcing financial values over time ensures that these lessons stick. Whether making decisions about charitable donations or considering the purchase of real estate, each moment can serve as a teachable opportunity.
3. Lead by Example: Actions speak louder than words. If you want your heirs to share your values about wealth, demonstrate those values in your own life. For example, some families create a formal family values statement to guide financial decisions. Others include their heirs in philanthropic endeavors or investment decisions, giving them firsthand experience in managing wealth responsibly.
One approach increasingly adopted by affluent families is creating a "family bank," where the family provides loans for significant life events like purchasing a home or starting a business instead of a traditional bank. This introduces heirs to real-world financial principles such as interest, repayment terms, and accountability.
4. Formalize Family Meetings: Organizing regular family meetings—preferably facilitated by a professional wealth advisor—can be a powerful way to align family members around shared goals and values. These meetings provide a forum to discuss wealth management and legacy planning and address concerns openly. Having an experienced advisor present ensures the meeting is structured, purposeful, and focused on your family's mission and long-term objectives.
The Takeaway: Wealth is More Than Numbers
The ultra-wealthy are leading the charge in showing that successful wealth transfer is about much more than legal structures or tax strategies. By focusing on family values, establishing open lines of communication, and engaging the next generation in decision-making, they are creating enduring legacies that transcend financial wealth.
While you may not have $25 million to pass down, the principles remain the same. Legacy is about impact—on your family, community, and beyond. As you consider the future of your wealth, take these lessons from the ultra-wealthy to heart and set your heirs up for long-term success, not just financial windfalls.
In this way, you ensure that the wealth you've worked so hard to build supports future generations and empowers them to live out your values and create a legacy of their own. After all, the accurate measure of wealth lies not just in what we leave behind, but in the values we instill and the lives we touch.
As a trusted wealth advisor, we're here to guide you through every step of building your family's legacy. Contact us to explore how we can help you prepare your heirs for the responsibility and the privilege of inheriting wealth.
Insights from John J. Bowen Jr. inspired this blog.
