Generational Wealth Planning

Rahm Emanuel, President Obama’s Chief of staff was quoted as saying:

“You never let a good crisis go to waste. And what I mean by that, it’s an opportunity to do things you could not do before”

The Covid-19 pandemic has been such a crisis! It’s given us all the opportunity to stop, recalibrate, and review the way we live our lives. This has been the silver lining in what has been a challenging and tough experience for everybody and if any good can come of it, we have to change the way we live for the better!

One such opportunity is undertaking a review your family’s wealth and financial planning strategy?

A shared value among the Activ8 Group’s affluent clients is the desire to preserve and transfer their wealth to the future generations seamlessly and tax efficiently. The protection and transfer of this  legacy to future generations is a crucial element in their planning process. Families want to pass on their values, enriched by their own experience and wisdom to their future heirs.

One of the greatest risks to the retention of the family legacy is the financial inexperience of their heirs. Studies show that 90% of first-generation wealth fails to reach the third generation. The common saying “shirt sleeves to shirt sleeves in three generations” applies most profoundly.

Generational Wealth Planning is fast gaining traction and becoming a cornerstone of good wealth management and financial planning advice.

The fallacy is that that the phenomena only applies to the “rich”! The truth of the matter is that all families are impacted by Generational Wealth Planning. The lack of appropriate planning, poor investment choices and inadequate structuring will severely impact the ability of the next generation to retain the wealth transferred to them.

Families should be asking each other the following questions:

  • Do we have a wealth strategy that considers the principles of Generational Wealth Planning?
  • Have we undertaken a cash flow exercise to ensure that our assets are sufficient to fund our lifestyle?
  • What is the probability of negative wealth passing to future generations?
  • Do we have adequate cover for the unanticipated expenses in life?
  • Is our Last Will and Testament current or is a review required?
  • Has a review of the beneficiary nominations on the life policies and investments been done?
  • Do we have a professional trusted advisor to guide the family through these matters?
  • And most important of all, have details of the plan and strategy been shared with family members?

At the Activ8 Group, Generational Wealth Planning, is core to our advice philosophy and the strategies we implement for clients. In the forthcoming series of articles, we will examine the core principles pertaining to Generational Wealth Planning, and how families can better prepare for the next crisis!

Don’t let the Covid-19 crisis go to waste, engage with one of our advisors to discuss our Generational Wealth Planning process. Click here to get in touch.