Building wealth is one challenge, and creating a plan that helps your family preserve and manage that wealth across generations is another.
Before getting into the specific strategies families can consider, it helps to understand why starting these conversations early can make such a difference. Riley Crosbie of Crosbie Financial shares what his team has seen when working with families preparing for a future wealth transition:
“More and more, our financial advisors are having conversations with families who are concerned about how their children and grandchildren will handle a wealth transition. This uncertainty puts a lot of stress on first-generation wealth builders. We have found that the biggest wins come from having open conversations about values and expectations long before what is traditionally encouraged. The families who start that dialogue early are the ones who avoid conflict and confusion down the road.”
At Crosbie Financial, we help families create structured strategies that connect wealth with family values. Whether you want to preserve a family business, support future grandchildren through education, or ensure your adult children are prepared to steward an inheritance responsibly, multi-generational wealth planning requires a thoughtful and proactive approach.
Here is how you can build a resilient financial plan designed to support your family across generations.
1. Integrating Tax Considerations and Lifetime Gifting Strategies
An effective legacy plan incorporates tax-aware strategies designed to optimize what remains within your family. Working with an advisory team that emphasizes a CPA-minded approach helps coordinate your overarching estate goals with annual tax considerations.
Annual Exclusion Lifetime Gifting
Under current federal tax rules, individuals can gift up to the annual exclusion amount to as many individuals as they choose each year without generally needing to file a federal gift tax return.
Strategic lifetime gifting can serve two primary purposes:
- Managing Future Taxable Estate Size: Moving appreciating assets out of your portfolio over time may help manage the total size of your taxable estate.
- Providing Immediate Impact: Gifting during your lifetime allows you to see the practical benefit your support provides, such as helping children or grandchildren fund an education or purchase a primary home.
Capital Gains and Basis Adjustments
When transferring appreciated assets such as real estate or individual equities, tax treatment varies depending on the transfer method. Assets inherited at death currently receive a step-up in cost basis to fair market value, which may reduce capital gains tax obligations for beneficiaries when sold. In contrast, lifetime gifted assets generally retain the original donor cost basis. Balancing lifetime gifts with inherited transfers requires careful coordination between your investment strategy and tax guidance.
2. Preparing the Next Generation Through Family Communication
Transfers of family wealth can encounter challenges when beneficiaries are unprepared for the responsibilities of managing significant assets. In many cases, difficulties arise not from market performance, but from a lack of financial education and clear communication.
Building a multi-generational legacy involves spending time preparing your family to manage wealth thoughtfully.
Core Elements of Family Wealth Preparation
- Maintain Transparent Communication: Share your financial values, work ethic, and expectations regarding family stewardship without necessarily disclosing full asset values right away.
- Promote Financial Literacy: Encourage adult children to develop foundational knowledge around budgeting, tax efficiency, and long-term investing.
- Introduce Professional Advisors: Connect your adult heirs with your wealth management team, CPA, and estate planning attorney so they have established resources when major decisions arise.
3. Addressing Business and Property Succession
For business owners and property holders in Northern Utah, a substantial portion of net worth is often tied up in illiquid holdings. Transitioning a closely held business or real estate portfolio to the next generation requires careful structuring, particularly when some heirs actively participate in operations while others do not.
To support business continuity and maintain family harmony:
- Implement Buy-Sell Agreements: Utilize structured agreements funded by life insurance or reserves to provide liquid buyout options for non-participating family members.
Document Succession Timelines: Clearly outline management transition steps well in advance of planned retirement dates.
- Structure Asset Ownership: Separate real estate assets from operational entities using appropriate legal structures, allowing flexible income distribution while keeping operational management clear.
Planning for Lasting Financial Continuity
Creating a multi-generational wealth strategy is an ongoing process that evolves as tax laws change, family structures grow, and personal goals shift over time.
At Crosbie Financial, we dedicate the time required to understand your personal family goals, tax considerations, and wealth transfer objectives. We collaborate alongside other professionals to align your overall financial strategy with your long-term vision.
If you are ready to explore options beyond a standard will and build a structured multi-generational plan, contact Crosbie Financial today to schedule a discovery meeting.
Securities offered through Riley S. Crosbie Advisory, LLC, DBA Crosbie Financial, a SEC Registered Investment Advisor. The information provided in this blog is for educational and informational purposes only and should not be construed as investment advice, an offer, or a solicitation to buy or sell any security or to adopt any investment strategy. Any references to specific securities, companies, or market data are for illustrative purposes only and may not be suitable for all investors. All investments involve risk, including the potential loss of principal, and are not guaranteed unless expressly stated. While the information presented is believed to be reliable, its accuracy or completeness cannot be guaranteed and is subject to change without notice. Past performance is not indicative of future results. Readers should consult with a qualified financial adviser and/or tax professional who understands their personal circumstances before making any financial decisions.