Multi-Generational Wealth Transfer: How to Prepare Heirs for Significant Assets

By Joel R. Freedman, CFP®, CPWA®

For families looking to pass down significant wealth, the goal isn’t simply to transfer over assets; it’s to ensure that values, vision, and prosperity endure for generations.

However, statistics paint a sobering picture: 35% of Americans do not plan on discussing wealth transfer with their families.¹ Unfortunately, a lack of transparency often results in confusion, conflict, and missed opportunities.

Successful generational wealth transfer, on the other hand, entails clearly communicating your intentions and equipping your heirs with the necessary tools to preserve and grow your family legacy.

Education: Instill Financial Literacy & Confidence

Empowering your heirs to embrace financial literacy is essential to preserving generational wealth. Accordingly, it’s critical to start this education early and ensure it evolves over time.

For example, you might include your young children in family budgeting, encourage teenage grandchildren to contribute to their 529 plans, and involve young adult heirs in estate and tax planning.

As you include your loved ones in financial discussions and responsibilities, it’s important to recognize the potential for philosophical disconnect. While your ethos may center on the values of hard work, disciplined saving, and traditional investing, your heirs may lean more towards impact investing or alternative investments. 

By understanding and aligning your different perspectives, you can minimize conflict and increase the likelihood that the following will resonate:

Financial Literacy Programs
Younger generations who spend time on TikTok may encounter poor financial advice from unqualified influencers. By providing formal education on topics such as budgeting, investing, taxes, and estate planning—through online educational platforms, financial literacy apps, or sessions with experts—you can help ensure they are well-informed.

Family Meetings
Regular family meetings can foster open communication about wealth, its purpose, and the responsibilities it entails. These meetings provide a forum for discussing family goals, values, and future plans. Ensure that your heirs understand the origin of your family’s wealth—whether it came from entrepreneurship, strong investment acumen, or previous generations.

Mentorship
Direct involvement in wealth management can help prepare heirs for the responsibility of handling large estates. By providing opportunities for younger generations to help choose investments, manage charitable donations, or get involved in the family business, you can help build their confidence and encourage stewardship rather than entitlement.

Governance: Build a Culture of Communication & Accountability

Education lays the foundation, but governance is what holds the house together. Families that thrive across generations often treat wealth management like running a company, with shared goals, rules, and responsibilities.

Family governance promotes accountability and transparency, fosters inter-generational communication, facilitates family harmony, preserves family traditions, and sustains wealth across generations.

A great starting point is to establish a family constitution that codifies your values, expectations, and vision, including guiding principles for philanthropic giving, investing, education, leadership, ownership, and succession.

Depending on your family’s unique situation, your family governance framework may assume various forms, including:

Family Councils
Similar to a Board of Directors, a council is comprised of select family members elected to manage your affairs and represent the best interests of all parties. Council members may make decisions regarding liquidity, family employment, or conflict resolution.

Family Assemblies
This involves gathering all family members annually, semi-annually, or quarterly (under the guidance of the family council, if applicable) to discuss leadership development, review legal or taxation issues, and pinpoint opportunities to enhance family unity or philanthropic impact.

Family Business Advisory Boards
Qualified advisory board members can offer objective advice based on their expertise, help identify unique business opportunities and provide outside perspectives on strategy and decision-making.

Structure: Employ Tax-Efficient Wealth Transfer Strategies

Estate and tax planning are crucial for preserving your wealth for future generations. The good news is that there are various strategies you can implement to help minimize the value of your taxable estate and mitigate the eventual tax burden on your heirs. If you plan to pass on significant wealth, here are three options to consider:  

1. Gift money directly during your lifetime.
The current lifetime estate and gift tax exemption is $13.99 million for individuals and $27.98 million for couples.² With regular gifting that stays within the annual exclusion limit—$19,000 per person in 2025²—you can support your loved ones financially, help the next generation achieve goals such as earning a degree or buying a home, and avoid triggering gift taxes.

2. Support charities your family is passionate about.
Another way to remove assets from your taxable estate is to make donations to qualified charitable organizations. If eligible, these contributions result in a tax deduction of up to 60% of your adjusted gross income (AGI) in the tax year you donate, but you must itemize deductions on your return.³  Donating appreciated stocks and securities, implementing Qualified Charitable Distributions (QCDs), and establishing Donor Advised Funds (DAFs) are additional strategies to help mitigate estate taxes.⁴

3. Set up irrevocable trusts.
When you transfer assets or funds into an irrevocable trust, you can legally remove them from your taxable estate while you’re alive and distribute them to your heirs when you pass. For example, generation-skipping trusts enable you to bypass your children (and the estate taxes that would incur if they received an inheritance directly) and distribute assets directly to your grandchildren.⁵ Additionally, irrevocable trusts can help:

• Remove appreciable assets from your estate while providing beneficiaries with a step-up basis in value
• Protect your family’s assets from potential creditors and lawsuits
• Prevent heirs from misusing their inheritances by setting conditions for wealth distribution
• Hold a life insurance policy, while removing the death proceeds from your estate
• Gift a principal residence to your loved ones in a tax-efficient manner
• Retain income from assets gifted to your estate ⁶

Collaborate With Experienced Professionals

Preparing the next generation for wealth stewardship involves not only the mechanics of wealth transfer but also fostering the knowledge, mindset, and values needed to manage it successfully.

Eclipse can help reduce stress, align the right solutions, and coordinate with your estate attorneys and tax professionals to ensure an integrated plan for wealth transfer.

Let’s set up your heirs for success.

Sources

¹https://www.edwardjones.com/us-en/why-edward-jones/news-media/press-releases/great-wealth-transfer-research
² https://www.ml.com/articles/estate-gift-tax-exemption-sunset.html
³ https://www.irs.gov/publications/p526#:~:
⁴ https://www.oppenheimer.com/news-media/2025/insights/articles/january/legacy-planning-a-key-component-of-financial-wellness.aspx
⁵https://www.investopedia.com/terms/g/generation-skippingtrust.asp
⁶ https://www.investopedia.com/terms/i/irrevocabletrust.asp#:~: