How to Start Generational Wealth Planning: Essential Steps for Long-Term Success
- Troné Fossum
- 4 days ago
- 11 min read
Generational wealth planning is about creating a thoughtful strategy to accumulate, preserve, and pass on your wealth in a way that benefits your family for decades to come. That means your children (and their children) have greater financial stability and a foundation from which they can build their own wealth.
360 Financial is a family-owned practice with big firm capabilities. 360 helps investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Thinking Long Term Is Key
When we think about money, many people focus on the now — covering expenses, building an emergency fund, or saving for retirement.
But real financial security means thinking long term, beyond your own lifetime.
Generational wealth planning is about creating a thoughtful strategy to accumulate, preserve, and pass on your wealth in a way that benefits your family for decades to come. That means your children (and their children) have greater financial stability and a foundation from which they can build their own wealth.
But how do you make that happen?
Passing down wealth in a tax-efficient manner requires careful planning and consideration. Key strategies include a solid estate plan, trusts, and tax-efficient investments.
This article will explore the steps needed to help you safeguard your wealth for future generations.
What Is Generational Wealth Planning?
Generational wealth planning is the process of preparing your financial assets, investments, and estate so they can be passed on to future generations with ease.
The goal is to build, preserve, and transfer wealth across multiple generations. It’s a long-term approach to financial planning that considers family values, legal tools, and smart investment strategies.
Why does it matter? Because without a plan, family wealth can disappear in just one generation.
A study by the Williams Group indicated that 70% of wealthy families lose their wealth by the second generation, and 90% by the third. However, other sources, such as multi-generational wealth consultant James Grubman, point out that this assessment may not be true.
The 70% rule is a product of a single study, which was published in 1987, referred to as the Ward study. Grubman’s critique highlights that the Ward study focused narrowly on family businesses, not total wealth, and a 2011 study by the Family Business Review found higher success rates in wealth preservation when families prioritize governance and education.
Regardless, nobody wants to be a statistic.
If you've worked hard to build your wealth, you likely want to seek to ensure that it is transferred according to your wishes after death. Passing wealth to your loved ones isn't a simple one-step process. In many cases, it requires estate planning, tax planning, gifting strategies, trusts, and insurance strategies, as well as a solid investment strategy.
Without all this planning, your family's wealth could be dramatically diminished by taxes, or even end up in the wrong hands. For example, federal estate taxes apply to estates exceeding the exemption amount ($13.99 million per individual in 2025) and can be taxed at rates up to 40% on amounts over the exemption.
Essentially, planning today means safeguarding tomorrow.
Multi-Generational Wealth Planning Overview
Multi-generational wealth planning includes the following:
Creating a strong financial foundation
Building wealth with long-term strategies
Diversifying investments
Putting in place tax planning strategies
Working with an excellent wealth management firm or family office
Establishing trusts when relevant
Having a clear estate plan
Incorporating life insurance
Doing strategic gifting
Preparing for business succession
Raising financially confident and informed children
Working with a team specializing in generational wealth
How to Start Generational Wealth Planning
It doesn't matter if you're starting with $100,000 or $10,000,000. What matters is starting.
Here are a few key steps that can help you build and transfer wealth to the next generation.
1 - Create a Strong Financial Foundation
Every great legacy starts with the basics. Budgeting, saving, and reducing debt provide the foundation for long-term growth potential. Even if you’re financially comfortable, a lack of clear budgeting or saving strategies can limit your ability to build lasting wealth.
Strong financial habits help preserve wealth and create space for long-term goals. Think of it like building a home. Your foundation matters most. As you earn more, make sure that you're saving and investing more. Work with your financial advisor or wealth management team to create a financial plan and investment strategy that works for your family.
2 - Build Wealth with Long-Term Strategies
Consistent investing over time is a cornerstone of effective wealth planning. By regularly contributing to diversified investment accounts (index funds, retirement plans, or real estate portfolios), you can benefit from compound growth.
Even modest, steady contributions can accumulate significantly over decades, especially when reinvested and managed with a long-term horizon in mind.
Smart financial habits are also key. Automating savings, maintaining an emergency fund, and paying off high-interest debt are foundational behaviors that help your wealth accumulate over time. These habits also set a financial example for future generations.
In addition, make sure you include your kids and grandchildren in conversations about money and financial planning. These conversations will serve as their financial foundation.
3 - Diversify Investments
Relying on a single type of investment or income source can be risky. A diversified portfolio aims to reduce risk and increase the opportunity to accumulate wealth.
Diversification also means exploring different income streams, whether it's real estate, stocks, or even family businesses. Safeguarding your assets starts with not putting all your eggs in one basket.
4 - Don't Forget about Tax Planning Strategies
Estate taxes and income taxes can take a big bite out of your wealth. That's why tax planning is essential. Strategies like gifting, trusts, insurance policies, and charitable giving can help you minimize estate taxes and transfer wealth in a tax-efficient manner.
For instance, gifting up to $19,000 per recipient in 2025 can reduce taxable estates without triggering gift taxes.
Most people overlook taxes, but they're often your biggest expense. Make sure you’re not paying more than you're required to pay. Your financial advisor should review your tax return to seek to ensure you're not missing out on any tax planning opportunities.
5 - Work with an Excellent Wealth Management Firm
You don't have to figure it all out alone. A firm that offers holistic wealth management can help you preserve wealth, invest wisely, and plan ahead.
Look for a team that acts within a fiduciary environment. A fiduciary is legally obligated to put your interests first. They can't just give you good advice or reasonable advice; they must give you the best advice possible.
Working with qualified financial professionals should give you greater confidence as you head into retirement and begin your estate planning. By helping you navigate things like taxes, investments, and estate planning, a good wealth management firm helps you to preserve your family's wealth. They'll offer advice that’s personalized to your needs so that you can make smarter decisions for your future.
And they'll provide guidance as you navigate big life and wealth milestones. Generational wealth planning is a lot simpler and easier when you're not doing it alone.
6 - Consider Establishing Trusts
Trusts are powerful estate planning tools. They can help you preserve assets, control how money is distributed, avoid probate, while also offering asset preservation from creditors and spousal remarriage risks.
Revocable living trusts, for example, allow flexibility during your lifetime while bypassing probate and saving families from legal fees.
Trusts are also useful for providing for younger generations in a responsible way. With the right structure, you can seek to ensure that your financial goals align with how and when your family members receive their inheritance.
In addition, if you have a blended family, a trust can be a smart way to help ensure that all members of the family are taken care of no matter what happens. A trust strives to ensure that both your kids and your spouse's kids receive their inheritance regardless of which spouse dies first.
7 - Have a Clear Estate Plan
An estate plan includes your will, healthcare directives, power of attorney, and more. A strong estate plan strives to ensure your wishes are followed and your family is supported.
According to a Gallup poll done in 2020, only 46% of respondents said they had a will. So, you're not alone if you've been putting off your estate planning.
However, planning now gives you control over important decisions, such as who will make medical decisions on your behalf and how your assets will be distributed, if you're no longer able to make them. Without these legal safeguards in place, your family may face unnecessary delays, legal costs, or even disputes during an already difficult time.
8 - Incorporate Life Insurance
Life insurance can provide financial security to your loved ones. It can also be used as a tool for building generational wealth or funding a trust. Since life insurance payouts are typically not included in gross income, your loved ones won't have to pay tax on a life insurance payout, making them a good tool for estate planning and generational wealth.
Permanent life insurance, such as whole life, can accumulate cash value, offering tax-deferred growth potential for wealth transfer.
The right policy helps cover estate taxes or safeguard a family business. It aims to ensure your legacy endures without draining other financial assets.
Note: For very large estates, life insurance death benefits may still be included in the estate for estate tax purposes if the deceased owned the policy. Using an irrevocable life insurance trust (ILIT) can help keep proceeds outside your estate. Make sure you work with professionals to seek to ensure your life insurance is structured appropriately based on your generational wealth goals.
9 - Consider Strategic Gifting
Strategic gifting allows you to pass on wealth during your lifetime while reducing your taxable estate. Beyond cash, you can gift appreciated assets, contribute to education funds, or help with major life expenses.
When planned carefully with professional advice, gifting becomes a powerful way to shape your legacy and support your loved ones.
Estate Planning Case Study with Mike Rogers, Founder of 360 Financial
“We had a family meeting with a client. His health was deteriorating, and he had some real wishes that he wanted to make sure were granted upon his passing. Specifically, he wanted to leave a legacy around education and providing for the grandkids to have college paid for — or at least a large majority of it. Through the estate planning process, we avoided the potential of infighting between different kids within the family who had different numbers of kids and grandkids. By speaking about his wishes and having the time to set up the appropriate accounts, we prevented any potential issues that would have come up later. The solution was to create college funding accounts and fund them upon the death of our client through the proceeds of an old life insurance policy. It was very clean and very straightforward. Everybody knew what was happening and why the proceeds of the insurance policy were being directed toward the college funding accounts. They knew that it was what their dad or grandad wanted.” |
10 - Prepare for Business Succession
If you own a family business, succession planning is key. Who will run the business when you step away? A clear plan aims to preserve your legacy and helps your family stay united. Without one, your business could face financial and legal challenges.
Smoothly transitioning leadership helps preserve what you've built and keeps operations strong for the future.
11 - Raise Financially Confident and Informed Children
The best inheritance is knowledge. Teach the next generation about budgeting, investing, and good financial values.
Open communication helps to ensure they are ready to manage what they receive. Providing your kids with a good financial education helps them have the tools to preserve wealth and make smart choices.
12 - Work with a Financial Advisor Specializing in Generational Wealth
A trusted financial planner who understands multi-generational wealth can help you plan with clarity. They'll help you navigate changing laws, customize strategies, and bring confidence to your financial decisions.
The right advisor can also guide you through complex situations like blended families or business ownership. With qualified support in financial planning, you can feel confident that your plan will stand the test of time.
Pass Down Prosperity with Purpose and Clarity
More than anything, building generational wealth is about intention.
It's about aligning your assets with your values and having open conversations with family members. When everyone understands the plan for multi-generational wealth, the transition is smoother and more meaningful.
Common Questions
What is the three-generation rule for wealth?
The "three-generation rule" — sometimes summarized as "shirtsleeves to shirtsleeves in three generations" — refers to the idea that wealth accumulated by one generation is often lost by the third. The first generation builds the wealth, the second maintains it, and the third spends or squanders it.
While this phenomenon is real in some families, it’s not inevitable. With intentional planning, education, and strong family governance, families can break the cycle and sustain wealth far beyond three generations.
How much money do you need to start generational wealth?
There’s no minimum dollar amount required to begin building generational wealth. Whether you have $100,000 or $10 million, what matters most is having a strategic plan and disciplined financial habits. You also need to cultivate a long-term mindset.
Consistent investing, tax planning, estate planning, and family education aim to turn even modest assets into significant multigenerational wealth over time.
What is the best way to create generational wealth?
The best way to create generational wealth is to combine strong financial habits with strategic planning. Working with a qualified wealth management team seeks to ensure that your strategies evolve with changing laws and family dynamics, helping to preserve and accumulate wealth over the long term.
📹 Watch the 360 Webinar for Tips on Maximizing Wealth Through Estate Planning
Final Thoughts
Generational wealth planning is about more than securing your own financial future.
It's about laying the groundwork for intergenerational wealth that empowers your family for decades to come. It requires clear intention, thoughtful estate planning strategies, and proactive decision-making to strive to ensure that what you build today becomes a lasting legacy tomorrow.
Whether you are managing modest personal finances or overseeing significant wealth, the most important step is to start with a strategy that reflects your family’s values and goals.
Many families find success by working closely with trusted financial professionals, who help them navigate everything from investment planning to market volatility.
These partnerships can help ensure that you have the structure and support needed to adapt and seek growth across generations.
For many families, the greatest legacy isn't just wealth itself, but the knowledge, stewardship, and opportunities they pass along. By combining smart financial strategies with open family communication, you can foster confidence, prosperity, and purpose across generations.
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About 360 Financial
360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Headquartered in Minnesota, we serve investors across the US with online and in-person wealth management and financial planning services.
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