Estate Planning | January 2025 How to sustain your wealth through the generations

When you think of estate planning, wills and trusts likely come to mind. That’s because they’re an important method of ensuring wealth gets transferred as intended.

“I really like to think of estate planning as a pyramid,” says Trista Shigley, fiduciary division director of Truist Wealth’s Trust and Estate Planning Group. “You have to get the foundation documents in place before you put additional layers on the pyramid.” Shigley says the foundation documents of the pyramid are a power of attorney, a health care power of attorney, a living will, a will, and a revocable trust.

• Living wills differ from state to state but typically provide direction around end-of-life preferences.
• Wills are legal documents that outline how affairs are handled and wealth is distributed after a death.
• Trusts are legal structures that allow for transfer of assets from the grantor to the trustee and, eventually, to beneficiaries. However, unlike wills, trusts avoid probate after the grantor’s death, so they ensure more privacy concerning the nature and value of assets. Revocable trusts, in particular, are typically put in place while the grantor is alive, and can be amended over time, as needed.

Having a trust architecture in place can lead to better financial outcomes and family outcomes, protecting your assets and distributing them in a way that matters most to the grantor.

Truist Wealth specialists emphasize that having a sound document framework doesn’t ensure that wealth continues to grow from generation to generation. In fact, often the opposite happens.

“Research suggests that families have less than a one in three chance of maintaining wealth through multiple generations,” says Emily Haenselman, director of family education at the Truist Wealth Center for Family Legacy. These low odds are due to a variety of factors, but not the ones you may think. “The breakdown in wealth is due far less to errors having to do with taxes, investing, or legal errors, and more to do with the family itself.”

Failure in communication, inability to manage and grow wealth, and lack of shared values are all key contributors that can cause inheritance to dwindle over the generations. What does help sustain wealth over generations is mentoring younger family members so they’re personally, professionally, and financially prepared to live a successful life with the wealth that’s been passed down to them.

Having intentional conversations with all family members about what’s important to them, and their goals and values, can help everyone get on the same page. By starting early and speaking often, families can help younger generations build their wealth literacy and help ensure inheritance is not lost over the years.

One of the most reliable ways to ensure wealth carries across the generations is to develop a strong family culture, which can be a guidepost for making financial decisions for years to come.

But what is family culture? In sum, it’s a family’s set of shared values, beliefs, and practices. It’s a way of life that you’ve grown up with, and it shapes your everyday actions.

The first step to create this culture is to craft a mission statement—a kind of north star for future decision making. David Herritt, head of the Center for Family Legacy, says the mission statement stems from identifying shared values in the family. “Values are core to how families communicate, how they interact, and how they make decisions,” he explains.

Beyond sharing and exemplifying your family’s mission statement, another key way to build a family culture is to tell stories about previous generations and their hard work, dedication, and philanthropy.

By living out your mission statement, sharing family stories, and teaching future generations about spending and saving, you can prepare the next generation to not only receive wealth, but also to manage it responsibly and in a way that’s aligned with the family’s values.