Creating Generational Wealth

“Give your kids enough so they can do anything but not so much that they’ll do nothing.” Warren Buffet

Generational Wealth. Warren Buffet is giving 99% of his wealth to charity but will still leave a substantial legacy for his family. Enough to secure his future generations. Why not leave it all? The answer lies in his values outlined in his quote above.

When I think of generational wealth, I think of “old money”. We have all heard that term – money that was earned in previous generations and passed on to the next and beyond. I think of families such as the Weston (Loblaws) or the Irving (Lumber and Oil) families in Canada or the Walton family in the US (Walmart). Wealth and security passed down multiple generations that has been maintained, grown, and prudently managed. What a head start in life – it should be easy street. But interestingly creating and maintaining generational wealth is harder than it sounds.

This may sound silly but in reality, there are many examples where wealth has been destroyed simply because a framework and strong values were not laid as a foundation for success. It is estimated that up to 70% of families lose their wealth in the 2^nd generation. 90% beyond that.[1] The most famous families make front page news. In Canada, it is easy to recognize the Eaton family. At one time, their chain of department stores was one of the largest private employers in Canada. A mere three generations later, they are but a lesson in the history books. Here are a few famous American families who suffered the same fate:

How 5 of America’s Richest Families Lost it All

But here’s the thing…. You don’t need a billion dollars to be concerned about how your kids will handle receiving money. The rules are the same. Talking to your family about money is important not only for their financial lives but it will help prepare them for a time when they may be receiving an inherited gift.

At Thomson Financial Partners, we spend a lot of time talking about creating good inheritors for our clients. We think about your values and habits that go along with protecting what has been built over time and passed on. We strive to work with clients who want to create a lasting legacy for their families.

Whether it’s a billion-dollar inheritance or a hundred thousand…. the formula for success is the same.

We hope you enjoy Ben Carlson’s blog and corresponding podcast on the subject (fast forward to minute 21 for the segment on generational wealth). We think you will find value and give you some things to think about for your family.

Creating Generational Wealth