A startling fact is that 70% of families lose their wealth by the second generation, according to Money. The reason? Lack of wealth preservation. When families take their wealth for granted and don’t hire professional estate planning services, they can lose everything. This article will explain what wealth preservation is, and why it’s important.
Wealth Preservation
Wealth preservation is safeguarding and growing assets over time and from one generation to the next. It’s concerned with the here and now, and the future. There exist laws and regulations that, unless understood and planned for, can greatly dilute wealth before it goes from one pair of hands to the next. Successful wealth preservation reflects an understanding of the law and advantageous decision-making to mitigate taxes and other threats to wealth.
Estate Planning
Estate planning is structuring assets and making legal moves to prepare for the succession of wealth. This is successfully undertaken with professional advice and takes time. Once a person is making a regular salary, estate planning steps should be taken. Many Americans think that estate planning is something to take care of near or after retirement. However, preparation for accidents including early death, and other major life events such as divorce will have major wealth preservation implications. While it’s true that estate planning should intensify over the course of a person’s life, it’s never too early to meet with an estate planner to begin the process.
Key Actions
Some of the most critical components of wealth preservation include the preparation of legal documents, such as wills and trusts. These documents describe what will happen with the assets a person has once they are dead. Just as a person’s wealth will change over their life, so should their wealth preservation plans. It’s important to make initial plans with an estate planning professional, and then revisit and refresh those plans regularly. In addition to preserving wealth, which can be a huge benefit to future generations, taking these steps will help grieving family members avoid making big and potentially contentious decisions in the wake of a death. Planning brings confidence and peace.
We spend so much of our lives trying to gain assets that can benefit our families. It’s a tragedy when that hard work goes to waste, and particularly due to a lack of understanding of how to protect those assets. Making and executing wealth preservation plans will keep the wealth in the right place so that it can continue to be a resource to loved ones.