People talk about being “set for life.” Once you have accumulated enough wealth to be certain that you will never want for anything you have reached a certain plateau. But then you may concern yourself with leaving behind a financial legacy for succeeding generations.
If you leave behind tens of millions of dollars or perhaps even hundreds of millions you would think that this would probably be sufficient to keep your family in rarefied financial company forever. However, the statistics tell a different tale.
Ordinary people may be surprised to hear that it is not easy to hang on to large sums of inherited money. The Wall Street Journal recently published an article that examined the ways that large inheritances are lost. Within the article the author cites a couple of very telling statistics.
Just 30% of the original inherited wealth lasts through the second generation on average, and after the third this figure plummets to just 10%. That’s 90% of the initial inheritance going down the drain within two generations.
Bad investments and poor money management skills are part of the problem. But without question, the federal estate tax is a huge factor.
This tax is going to be imposed when you pass along your resources to your children. If the wealth is still considerable when your children pass away the tax will then erode this fortune even further as it is applied again.
When your grandchildren ultimately leave behind the family financial legacy it would be subject to the estate tax a third time if there is even anything in excess of the exclusion amount left by then.
There are proven wealth preservation strategies that are often implemented by estate planning attorneys, including the creation of dynasty trusts. If you’re interested in preserving your hard-earned wealth for the benefit of succeeding generations contact our firm at (216) 472-1500 to set up a consultation.
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