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How to Create a Multigenerational Wealth Plan for Your Family

Picture of Randall E. White

Randall E. White

sandwich generation financial tips

If you’re hoping to put a multigenerational wealth plan in place, you’ll want to keep this old adage in mind: “rags to riches in three generations.” It refers to the phenomenon of it taking only three generations for most families to lose their wealth entirely. The first generation builds the wealth, the second generation spends it, and then the third generation doesn’t see any of it. It’s not that families plan for this to happen. In fact, most people hope that their legacy will last and continue to grow for many generations to come. However, building long-lasting wealth that will be preserved and grown over multiple generations takes more than hope – it requires a special kind of planning and dedication. Below we’ll discuss a few helpful guidelines for you to keep in mind for your multigenerational wealth plan.

Broadening Your Understanding

Typically, estate planning is understood as the development of a strategy that serves to manage an individual’s asset base in the event of their incapacitation or death. However, thinking about estate planning like this can ultimately be problematic, as it disregards any mention of generational intent. Once the first generation passes away and the second generation has access to the estate, the estate plan’s purpose is satisfied. If you want to build a long-lasting legacy, you need to take up a broader understanding of estate planning.

The Secret to a Successful Multigenerational Wealth Plan – Keeping the Money Together

It’s been reported that some of Cornelius Vanderbilt’s last words to his family were to “keep the money together.” Unfortunately, his family failed to heed his advice and, as a result, they lost their fortune. Meanwhile, the Rockefellers seemed to follow this way of thinking rather closely and when we look at their wealth today, the family is worth billions of dollars in their seventh generation of wealth.

So, what can we learn from these two families about successful estate planning with the goal of preserving multigenerational wealth? You need more than just traditional estate planning documents; you need a generational strategy that maps out the future of your family’s finances, as well. These elements work in tandem to manage the assets and “keep the money together” over time.

As you get started planning your multigenerational wealth strategy, be sure that you get these three components in line first:


1.     Get in the Right Mindset

A helpful strategy is to blur the faces of your heirs in your mind as you consider your multigenerational wealth plan. Too often, people think solely of their children or grandchildren when they’re estate planning, but your goal is to reach as far into the future as possible to plan for generations that you’ll never get the chance to meet. This can be difficult to do when you’re thinking about those that are right in front of you. That’s not to say that you can’t have specific gifts you want to give your children and grandchildren, and those can be put into your estate plans. Your multigenerational strategy, however, requires that you take a few steps back and look at the bigger picture of what you want for your family for a great many years to come.

2.     Communicate Clearly and Openly

Money is still seen as a taboo topic by many people, making it a hard conversation to broach for many families. But if you’re looking to build a multigenerational wealth plan for your family, then you have to include your family in to your plans. That means having open and honest conversations about what you want to see happen and how everyone in your family plays into that vision. Otherwise, you’ll miss out on key opportunities to impart your knowledge and wisdom to your heirs.

It’s your responsibility to educate your family and provide guidance so that they’re prepared to pick up where you left off once you’re gone. Don’t simply assume that they’ll know what you know or that they’ll learn what you’ve learned. If you want your vision to be honored after you’re gone, take the time now to provide leadership, share your money values, and teach your children about how they should manage their inheritance.

3.     Put Your Intentions into Writing

Unfortunately, none of us live forever so simply telling your heirs what your intentions are for future generations isn’t enough. You need to put your vision down into a written document that can be passed down. As you begin to write out your multigenerational wealth plan, consider how you want your money to be used, how accessible you want it to be, and how you expect it to be preserved and grown by the generations that follow.

You can think of this document as a family constitution of sorts, which each generation will have the responsibility to take up and follow. The overarching goal for each generation should be to leave the family estate in better shape than when they received it.

Consider Incorporating a Whole Life Insurance Policy into Your Investments

Typically, we assume that investments should be the primary vehicle used to grow wealth. However, if your goal is to build multigenerational wealth, then you might want to think about incorporating a whole life insurance policy into your plans. This can be helpful because of their inherent risk-mitigation characteristics. When these contracts are designed properly, they guarantee predictable results, which is useful for a multigenerational wealth plan.


With a whole life insurance policy, beneficiaries have a guaranteed death benefit, meaning that they’re guaranteed a tax-free lump sum at the death of the insured. This benefit can have a multiplying effect if the beneficiary uses some of the proceeds to purchase new whole life insurance policies, thereby creating wealth for the next generation, and so on. Additionally, these policies include a cash value that allows for the policyholder to tap into for a tax-free withdrawal or a loan while they’re still alive. This benefit comes with two prongs, the first being that the insurance company doesn’t require payment on the loans until the policyholder’s death, and the second being that the beneficiaries have access to cash while the cash value of the contract continues to grow uninterrupted.

Lastly, whole life insurance policies provide guaranteed cash value since the cash value accumulates at a tax-free, consistent, and predictable rate. This can make planning out cash flow for your family incredibly easy while also relieving you of the stress that can come from worrying about market risk or volatility.

Leaving a Long-Lasting Legacy for Your Family

Estate planning, in general, is a complex journey to navigate. If you’ve decided to take a multigenerational approach, it can feel like an overwhelming process. It requires a clear vision for what you want for your family’s future, as well as dedication to communicating and educating younger generations on how exactly they should handle their inheritance. Creating and preserving multigenerational wealth isn’t something that you can accomplish on your own; it’s going to take each generation playing their part and working together to build something that is long-lasting.

At TriCapital Wealth Management, we understand the intricacies of multigenerational wealth management and how it important it is to ensure your family is taken care of. If you’d like to have a conversation with one of our professionals about your estate plan and how to plan so your legacy lasts for generations to come, please contact us today.

Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.

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