The Guide to Creating and Managing Generational Wealth


About the Author

ep wealth advisors

EP Wealth Advisors

EP Wealth Advisors BlogPost 141793395626 The Guide to Creating and Managing Generational Wealth new EP Wealth Advisors


EP Wealth Advisors, LLC (“EP Wealth”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this report. EP Wealth has used its best efforts to verify the data included in this report. The information presented was obtained from sources deemed to be reliable. However, EP Wealth cannot guarantee the accuracy or completeness of the information offered. All expressions of opinion are subject to change without notice.

  • The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/ or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.

  • The information presented here is not intended to be regarded as a comprehensive list of considerations, including but not limited to, categories, services, or qualifications that a client or prospective client should consider when assessing or comparing Financial Advisors and/or Firms. As the author of this piece, EP Wealth Advisors, LLC (“EPWA”) has tailored the messaging of this article to align with the categories, services, qualifications, capabilities and services that it offers. There is no guarantee or warrantee that the services offered by EPWA will satisfy your financial services requirements. Services offered by other advisors may be more suitable to your specific needs.

  • There is no guarantee nor is the intention of this publication to establish any sense of assurance, that, if followed, the strategies referenced here will produce a positive or desired outcome. In fact, there is no guarantee that any of the steps detailed will enable the ability to generate successful or appropriate strategy or approach. The intent of this article is strictly for educational purposes.

  • The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. The referenced material identified herein is limited in nature and specific to what is offered by EPWA. There is no guarantee or warrantee that the services offered by EPWA will satisfy your financial services requirements. Services offered by other advisors may be more suitable to your specific needs.

Generational wealth describes the financial assets — cash, investments, property, and businesses — passed down through families from parents to children and grandchildren. While 2 million U.S. households receive a substantial gift or inheritance each year, the majority of these transfers are for $50,000 or less and only 2% of transactions involve $1 million or more.  


Sums aside, the most valuable asset you pass down may be the knowledge of how to manage and create more wealth with the money you give.  


Research indicates homeownership, use of tax-sheltered savings, and making savvy investment decisions are critical to holding on to wealth and financial security throughout the generations.  


Keep reading to learn how you can create and manage generational wealth for your family or download the complete guide and save it for later.  


Start Preparing Heirs as Early as Possible.


The fundamental question in estate planning is not, “How much should I leave my heirs?” But rather, “Are my heirs ready to receive this wealth?”  


It’s estimated 70% of wealthy families lose their wealth by the second generation and 90% lose it by the third. The reason is that it requires a different type of skill set to manage wealth than it does to create or spend it.  


You can set your heirs up for success when you: 


  • Share your wishes and important details with them. 

The more time family members have to think about and plan the transfer of wealth, the better. You don’t want your child planning for a retirement funded by assets they will never receive. Likewise, you don’t want emotions running high due to misconceptions.  


Share who you’ve chosen as the executor of your estate and whether you’re working with attorneys, accountants, or financial advisors. Your loved ones should know how to contact these people and where to find important paperwork if necessary.  


If you plan to leave a substantial sum, you may consider sharing your hopes for how they might use these funds to achieve their goals. The level of detail you provide is a personal decision that may be based on family dynamics, the amount of wealth you intend to leave, and how you think your assets may affect your loved ones’ motivation to succeed on their own.  


Explain whether you intend to split your assets evenly, provide inheritance based on need, or give money to charity — and why — to prevent any misgivings.


  • Give strategically. 

There are three options for your estate: 


  1. Leave it to your heirs
  2. Leave it to charity
  3. Or give it to Uncle Sam


To avoid capital gains taxes gouging your generational wealth, you might consider giving an IRS annual gift allowance (which is $17,000 per individual or $34,000 per married couple in 2023).  


Or you might also consider contributing that amount to your loved ones’ 529 plans — a type of investment account that can be used for higher education savings — which are not subject to federal income tax.  


  • Educational gifts can also be frontloaded, meaning you can make a one-time contribution worth up to $85,000 per individual or $170,000 per married couple without triggering a tax, though you will be unable to add funds to the account for a period of five years. 
  • If there are leftover funds, the beneficiary may roll $6,500 per year (up to $35,000) into a Roth IRA. 

You can also leave roughly $6 million in assets — like stocks, bonds, mutual funds, collectibles, and real estate — to your heirs outright. 



  • Teach heirs positive financial behaviors. 

A study conducted by TIAA-CREF revealed that, while only 30% of grandparents feel they have an influence over their grandchildren’s money habits, 85% of young adults welcome finance lessons from the older and more experienced generation. 


Begin early by introducing a piggy bank or books about finance. Even preschoolers are ready to begin understanding the difference between wants and needs and the idea of budgeting.  


Older children can open a bank account and learn about the reasons for investing. Talk about money often, weaving lessons into everyday stories about decisions you’ve made, capitalizing on teachable moments.  


Share your values and explain what money means to you — in terms of being successful, able to provide for loved ones, and engaging in charitable giving. Aim to be open about answering their questions and understanding that they’ll make some mistakes along the way. 


Pass Down Basic Financial Literacy. 

Today, individual Americans are largely in charge of preparing for their own retirements. They can no longer rely on a golden employer pension or government-administered social security to form the bulk of their wealth.  


To ensure positive financial outcomes, your family will need to be informed about topics like:  


  • Asset allocation and diversification
  • Mortgages, interest rates, and inflation
  • Market volatility and investment risk
  • Bond pricing and compound interest
  • Income tax brackets and estate tax obligations
  • Strategies to reduce taxable income

Encouraging your children and grandchildren to work with a financial advisor will ensure they understand these fundamental aspects of saving, investing, and managing money so they can knowledgeably review their financial plans and work toward their life goals.  


When a Business is Your Legacy, Plan Your Succession. 

If your wealth is tied up in a family business, making the most of its value requires a clear succession plan. Surprisingly, only 34% of U.S. family businesses have a succession plan in place.  


To create a transition plan consistent with your legacy goals and loved ones’ needs, ask yourself: 


  • Which family members are qualified and interested in taking over?
  • What is the business realistically worth, according to an unbiased third party?
  • How can I equitably divide my estate and include family members who are not interested in the business? 
  • Do I need the proceeds from the sale of my business to fund my retirement?

Set Up a Trust to Protect the Inheritance. 

Setting up a trust will benefit your loved ones when your estate exceeds the exemption amount or if you have extenuating family circumstances.  


Trusts can provide peace of mind when you’re worried your loved ones may:  


  • Lack the basic skills to manage money
  • Lose their motivation to be productive with their lives as a result of inheriting too much wealth at once
  • Engage in reckless behavior like gambling, addiction, or credit card debt 
  • Sacrifice their inheritance through a divorce or a lawsuit

Certain types of trusts can reduce your taxable estate, and assets in a trust do not go through probate, which helps keep your affairs private.  


Types of Trusts 


There are many options to consider depending on your goals, including: 


  • Generation Skipping Trust: Pass down a large estate while reducing estate taxes. 
  • Special Needs Trust: Support someone who is disabled without jeopardizing government benefits.
  • Spendthrift Trust: Provide detailed provisions for an underaged child, reckless spender, or divorcee. 
  • Credit Shelter Trust: Give a surviving spouse access to principal and interest, but pass on assets and asset growth to the next beneficiaries without estate tax.
  • Living Trust: Avoid probate by assuming full control over beneficiaries, assets, and rules.

Protect Your Wealth for Generations. Download the Full Report. 

The information we’ve covered so far is a great start to understanding how you can create and manage generational wealth for your family. To dive deeper into the data and what actions you can take, download the complete guide. You can even save it for later so that you keep referencing it as you start your journey.  


Get Guidance from a Professional Advisor Today.


Do you have more than $500,000 in investable assets? Get a free assessment. 


An EP Wealth Advisor can help you structure your estate in a way that maximizes your legacy and helps your loved ones make the most of their generational wealth. Whether you need to create a plan for retirement, tax opportunities, or risk mitigation, we are here to help.  


With 30+ offices nationwide, you and your loved ones can connect with an EP Wealth Advisor to learn more about creating a personalized wealth plan. 




Our breadth of coverage across the U.S. means we’re local—here to serve your needs at your convenience.