Sustaining Wealth: From Myth to Reality

Inherited wealth decreases by 50% every 20 years as compared to the average American’s wealth. Every six decades, this equates to an 88 percent drop in relative income. The downfall of wealth through generations is more common than one may care to realize and happens all around us.

Holistic Approach

Based on the difficult task of building wealth, family business owners and executives can overlook obstacles to maintaining what they have created. Although this can be challenging, the obstacles are not impossible to overcome. Whittier Trust has helped hundreds of families grow their wealth over generations through Whittier Trusts’ holistic approach that focuses on finances and family. 

Creating a balance sheet is the first step in the unique, holistic approach. The balance sheet helps determine where things stand today and creates a snapshot of all your assets and liabilities. This provides an itemized look into your overall net worth. 

Personal cash flow needs are the next step of the holistic approach. As your financial advisor, we examine your personal cash flow needs through simulations and scenarios that determine what kind of asset base is needed to support your lifestyle. The lack of an effective cash flow plan can lead to the force of selling equities during a market drawdown, making it difficult to recover for your portfolio if the market makes a rebound. 

Tax investing plays an important role in sustaining the wealth of your family. The US tax codes come with specific investment behaviors and structures, so it’s important to begin aligning your investment with tax codes. Along with tax code alignment and what assets to buy, the location of the assets is equally important. Choosing the optimal asset location can have a large impact on your after-tax returns. 

The most important part of our holistic approach is the family dynamics, where the approach begins and ends with your money. Families can be complicated at times, and these complications and conflicts only get larger with the growth of your family. Communication is key when dealing with family dynamics. When your estate plan is created, discussing it with your family and communicating the terms of the plan can suppress feelings of surprise and inequity. Family advisors are here to help and guide you through these difficult family conversations. 

An approach to help reduce conflict and bring a family together is philanthropy. Each generation will likely require different needs and priorities, and philanthropy can help with any conflicting values. Along with bringing the family together, a family foundation can teach younger generations the important skill of financial literacy. 

Estate Planning

Estate planning can be an effective way to sustain your family’s wealth. Through a thought-out planning process, tax liabilities can be reduced, assets will be protected and probate can be avoided,  just to name a few of the benefits. Estate planning may cause you to give up control of your assets or limit the flexibility of your financial plan, but with the help of a trusted advisor, the best trade-off for you can easily be determined. Keeping in mind the evolution of your estate plan and ensuring it’s a living document, as times change so should your estate plan to keep up with all of the changing trends in finances and planning. 

At Whittier Trust, sustaining your family’s wealth through a holistic approach involves balancing your finances and family to provide the most effective plans and outcomes for future generations. 

For more information, you can download the full report here or visit Las Vegas Review Journal to read more.

2021-06-14T10:36:36-07:00