.png?width=1080&height=1080&name=LinkedIn%20with%20Light%20Blue%20Background%20(1).png)
.png?width=1080&height=1080&name=Facebook%20with%20Light%20Blue%20Background%20(1).png)
.png?width=1080&height=1080&name=Instagram%20(1).png)
Ways to Minimize Family Disputes Over Inherited Wealth
EP Wealth’s Scott Upham, CIMA®, CPWA®, shares how clear communication, updated documents, and proactive estate planning can help families minimize...
EP Wealth’s Rich DeRafelo, CFP®, shares how families can prepare the next generation to manage wealth with education and growing financial decision-making skills over time.
How to Cultivate Financial Wellness Across Generations
Families with growing or newly accumulated wealth often ask the same question: how do we pass this on responsibly? The answer goes beyond setting up estate plans or drafting legal documents. A critical part of the process is preparing the next generation to make responsible financial decisions on their own. That kind of education doesn’t happen all at once. It’s a gradual, steady process that gives younger family members the opportunity to build strong financial habits over time, learn from experience, and gain confidence when it comes to navigating complex financial matters.
In my work as a CERTIFIED FINANCIAL PLANNER™, I’ve found that these three strategies can help families as they begin to build financial wellness across generations:
- Start with the current generation. Make sure you and your spouse are both informed about and involved in the family’s finances before turning attention to the next generation.
- Move incrementally. Use tools like annual gifting or staged trust structures to introduce fiscal responsibility in manageable steps.
- Focus on education. Share financial concepts gradually to give younger generations time to absorb and apply what they learn.
Start Early—With Both Generations
When families begin thinking about how to pass on wealth, a common oversight is to focus exclusively on how to educate and prepare the next generation. It’s also important to make sure the current wealth-holding generation is up to speed on key financial matters, especially in households where one spouse has traditionally handled all of the finances.
If the “CFO spouse” passes away or becomes incapacitated, the surviving spouse may be left navigating complex financial decisions with little background knowledge. It can feel like triage, with years of catch-up required. Before planning for the next generation, it’s critical to make sure both spouses are financially literate and aware of key assets, accounts, and planning decisions.
From there, financial education for the next generation doesn’t need to include every number or legal structure. It can start with basics: where the family’s wealth came from, how it’s maintained, and what values underlie its use—even if some details remain private.
Move Incrementally
Cultivating financial responsibility often works best by beginning with smaller steps and scaling over time. Here are two strategies that I have seen families use successfully:
Annual Exclusion Gifting
Annual exclusion gifting offers a low-stakes opportunity to start teaching younger family members how to manage money. Parents or grandparents can gift up to the current annual limit (currently $19,000 per recipient) and frame it as a test run.
Rather than treating the gift as a no-strings gesture, consider making it provisional: “Let’s see how you handle this.” Does it get saved? Spent? Invested? These experiences, especially when paired with advisor guidance, can lead to meaningful conversations. If mistakes happen, they happen on a smaller scale, before larger inheritances come into play.
Phased Trust Structures
One way to help the next generation build confidence is by easing them into responsibility instead of handing over full control all at once. Trusts can be set up in stages, so a beneficiary gradually takes on more decision-making as they hit certain milestones, like finishing school, getting a job, or reaching a certain age.
At first, a third-party trustee—whether it’s a trusted individual, corporate trustee, or advisor-managed service—handles everything. This gives the beneficiary time to observe how decisions are made without the pressure of being responsible right away.
In the next phase, the beneficiary becomes a co-trustee. They begin to take more of an active role, but the original trustee still has oversight and can step in if needed.
Over time, if things go well, the third party can step away and the beneficiary can take full control. Tying these transitions to milestones like graduating college or becoming employed helps reinforce that financial responsibility is something to work toward, not just something that’s handed over automatically.
The Role of the Advisor
For families with newly acquired wealth, this process is often unfamiliar. Parents may not have had these conversations as part of their own upbringing, which can make it harder to know how to approach them with their children. An advisor can help by facilitating the discussion, helping the families clarify their intentions and goals, and connecting financial decisions to their values.
Sometimes, this takes the form of a letter of instruction. While not legally binding, it offers a way to document what’s important to the current generation, beyond finances alone. It might include thoughts on philanthropy, expectations for future stewardship, or even simple logistical guidance. These kinds of documents, though informal, can help bridge the gap between generations.
Another important role we play is building trust and engagement with the next generation. That doesn’t mean telling them what to do—it means encouraging them to ask questions, even small ones, and helping them build the skills they need to make their own informed decisions.
For example, we might help a younger family member understand their employee benefits, enroll in a 401(k), or start thinking about saving habits. These early steps help establish good financial behaviors, a sense of ownership, and the confidence to engage more meaningfully as their responsibilities grow.
EP Wealth also offers ongoing educational webinars, and we encourage clients to invite their children or grandchildren to attend. These sessions offer a low-pressure way for the next generation to get informed, ask questions, and start engaging with financial topics on their own terms.
Planning with Purpose
Cultivating financial wellness across generations doesn’t mean focusing only on dollar amounts. It means helping members of the next generation feel confident and informed in their growing roles as financial stewards.
Learn more about how EP Wealth estate planning advisors support families in multi-generational wealth transfer.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- 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. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
