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  • Aafia Shabazz

Disappearing Wealth for the Next Generation.

Did you know 70% of Rich families lose their wealth by the Second Generation? Ways to secure generational wealth. It's a sobering thought to see those that are rich today their children not fair so well tomorrow Gone will be the days People dressed in tuxes and sipped cocktails. They owned boats, air planes, a hobby farm. Indeed, 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third U.S. Trust recently surveyed high-net-worth individuals with more than $3 million in invested assets to find out how they are preparing the next generation for handling significant wealth. Looking at the numbers, 78% feel the next generation is not financially responsible enough to handle inheritance, And 64% admit they have disclosed little to nothing about their wealth to their children. which is why I advocate inluding the children in all wealth building activities,People were taught not to talk about money, they worry their children will become lazy and entitled, and they fear the information will leak out. When I asked financial planners why the wealthy are so poor at passing along money smarts and why second- and third-generation heirs turn out to be so ham-handed, the answers were surprisingly frank. A sampling: “Most of them have no clue as to the value of money or how to handle it.” “Generation Threes are usually doomed.” “It takes the average recipient of an inheritance 19 days until they buy a new car.” Yes, the statistics may be grim. But just because most wealthy families see their fortunes evaporate within a couple of generations does not mean yours will. Some strategies to avoid it: Talk Early and Often You may think you are encouraging hard work by not disclosing wealth to your kids, but that really just fosters ignorance. Especially in the Black community, even though many are not wealthy, this process of not including the children into generational

wealth greatly affect the children it puts them at a disadvantage If you have just never talked about money, get over it, and give your kids a crash course in financial literacy. Many financial institutions, including U.S. Trust, offer specialized learning materials and courses to get heirs up to speed. Parents and grandparents should communicate the whats and whys of their will in a group setting, with all their children present, long before the will is read That way, you can hash out any issues as a family beforehand. It is better than after the fact, when the patriarch or matriarch is not around to explain or make adjustments, and things devolve into all-out legal war. Trust me, siblings will find out who got what Without proper communication, this can destroy families. Create a financial plan Almost one-quarter of baby boomers think their kids will not be able to handle wealth properly until the ripe age of 40. And almost half of wealthy individuals over 70 agree. That is why you should give your heirs a financial plan in the form of a family mission statement, advises U.S. Trust. You can lay out what you expect in terms of spending, saving, and giving back, as well as pass along strategies for building wealth.

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