Technically, the United States does not recognize any formal class system. However, many economic experts often divide Americans into two distinct economic groups. There are those who start fresh with each generation, and there are those who benefit from generational wealth.
Those with access to generational wealth may have an easier time securing an education or pursuing their entrepreneurial dreams. They generally have more resources in scenarios that involve job loss or other forms of financial hardship. Therefore, preserving generational wealth and passing down whatever is possible to one’s children is a goal for many adults in Texas.
How does someone go about maximizing what the next generation will inherit?
They review their finances carefully
Real estate holdings, investments, Retirement savings and financial accounts can all contribute substantially to an individual’s personal wealth. For someone to successfully maximize how much of that wealth passes to their children or grandchildren, they need to create a custom plan based on what resources they have. Therefore, a thorough review of one’s assets is important during the planning process. People often take steps to maximize their resources, such as diversifying their investments to buffer against economic shifts and improve their overall rate of return on their holdings.
They seek to protect their resources
After evaluating one’s financial holdings, it is much easier to properly protect them from lawsuits, divorce and creditor claims. For many people, trusts play a critical role in asset protection and the preservation of generational wealth. Real property, businesses and financial holdings can all become the property of a trust rather than an individual. That shift in ownership can protect those resources from litigation and collection efforts during someone’s life and even after their death. It will also give the trust’s creator over the long-term use of those assets.
They may consider structured giving
The longer someone lives, the later in life their beneficiaries will receive an inheritance. To maximize the positive impact of generational wealth, some people engage in structured gifts. Although large gifts are subject to gift tax, people can give thousands of dollars in cash and property to each of their family members annually without any tax implications. Doing so may help their loved ones improve their standard of living and invest in their own futures.
Seeking to preserve assets and to maximize the impact of what passes to the next generation can help those in Texas who want to create or protect generational wealth on behalf of their loved ones.