Commentary · Estate Planning
Generational Wealth Planning: A Practical Guide
Written by the William Allan team · Reviewed by Jason Crawshaw, CPA ·
There is a difference between building wealth and keeping it. Many families learn that the hard way.
Research on multi-generational wealth consistently shows that a significant share of family wealth can erode by the second generation, with even more disappearing by the third. In many cases, the problem is not recklessness or a bad market cycle. It is a lack of planning, communication, and intentionality around what the wealth is actually meant to accomplish.
Generational wealth planning is the work of closing that gap. It is the process of creating a financial legacy that lasts by transferring not only assets, but also values, knowledge, and purpose.
Start With the Why
Before focusing on strategies, account structures, and tax mechanics, it helps to step back and ask a more fundamental question: what do you want your wealth to do?
For some families, the answer is to create security for children and grandchildren. For others, it may be to support education, preserve a family business, fund charitable work, or create optionality for future generations. In many cases, it is a combination of several goals.
That question matters because the structure of an estate plan, the way assets are titled, and the conditions attached to distributions all flow from the purpose behind the plan. Families that skip this step often end up with technically sound documents that do not actually reflect what they want.
The Foundation: Estate Planning Done Right
If generational wealth planning has a foundation, it is a coordinated estate plan. That means more than simply having a will. It means putting in place a set of documents and structures that work together and reflect both current circumstances and long-term goals.
A strong foundation often includes a revocable living trust to help assets transfer privately and efficiently, updated beneficiary designations so account paperwork aligns with the broader estate plan, and powers of attorney and healthcare directives so trusted people can act if incapacity becomes an issue.
The larger point is coordination. A mismatch between a will, trust, beneficiary designation, or account title can create unnecessary friction and undermine the overall plan.
The Role of Gifting
One of the simplest tools in legacy planning is lifetime gifting. Under current tax rules, families may be able to transfer meaningful value over time through annual gifting strategies, though outcomes depend on individual circumstances and applicable law.
For larger estates, lifetime gifting can also help move future appreciation outside the taxable estate. In some situations, direct payments for qualifying education or medical expenses may also be treated differently from standard gifts. These strategies should be reviewed with qualified tax and legal professionals.
Talking to Your Family
One of the most overlooked parts of legacy planning is the conversation itself.
Transfers often go poorly not because of defective documents, but because heirs are surprised by the plan, unclear on expectations, or unprepared for responsibility. Families that communicate openly about values, purpose, and stewardship tend to navigate transitions more effectively than families that avoid the topic.
That does not require sharing every legal detail at the dinner table. It does mean having thoughtful, age-appropriate conversations about what the wealth represents and how it is intended to support the family over time.
Some families formalize this with shared principles, periodic meetings, or structured philanthropic goals. Others keep it informal. The format matters less than the intention.
Philanthropy as a Legacy Tool
For many families, a meaningful legacy includes charitable giving alongside support for the next generation.
Vehicles such as donor-advised funds can provide a relatively simple way to organize charitable planning and potentially involve children or grandchildren in the process. For families with larger or more specialized goals, private foundations and more customized strategies may be appropriate, though they typically involve more administration.
The right approach depends on the family, the scale of the giving, and the role philanthropy is meant to play in the overall plan.
Keeping the Plan Current
A legacy plan is not something you create once and forget.
Marriage, divorce, births, deaths, business changes, relocation, major increases or decreases in net worth, and changes in tax law can all affect whether an existing plan still works as intended. Many families benefit from reviewing their estate and legacy planning every few years, and sooner after any major life event.
A plan that made sense under a prior tax regime or family structure may need to be updated as circumstances evolve.
Where to Start
If legacy planning has been on your list for a while, the best time to begin is simply when you are ready to act.
A useful first step is a conversation with a financial advisor who can help clarify your goals and identify gaps in the current plan. From there, an estate planning attorney can help translate those goals into appropriate legal structures. Families often benefit most when financial, tax, and legal planning are coordinated rather than handled in isolation.
The objective is not perfection. It is a thoughtful plan that reflects what matters to you, is designed to hold up over time, and can adapt as life changes.
Ready to Start the Conversation?
Legacy planning is one of the most meaningful ways to care for the people and causes that matter to you. If you would like to explore what a thoughtful generational wealth plan could look like for your family, William Allan is here to help.
This commentary is for informational purposes only and is not investment, tax, or legal advice. All investing involves risk, including the possible loss of principal, and past performance does not guarantee future results.