When wealth is passed down through the family, it often is gone by the second generation. However, it doesn’t have to be.
Because wealth often dissipates by the second generation, it is important to make sure you are one of the exceptions that preserves the wealth, according to Financial Advisor in "These 5 Mistakes Destroy Generational Wealth."
Things to avoid if generational wealth comes your way include:
- Do not spend recklessly as soon as you get an inheritance. Buying all of your dream items, is not a good idea immediately after receiving an inheritance.
- Do not think you can handle the assets without receiving proper financial advice.
- Take your time to make a plan about what to do with the money. There is no need to act right away.
- Make sure that you are not paralyzed by all of your investment options. You should not act right away in a rush, but you do need to act eventually.
- Avoid giving to every friend or family member with a hand out, at your expense.
An estate planning attorney can guide you in creating an estate plan that fits your unique circumstances, including generational wealth.
Reference: Financial Advisor (May 23, 2017) "These 5 Mistakes Destroy Generational Wealth."