Generational Wealth: Building a Dynasty

Key Takeaways

• The Statistic: 90% of family wealth is gone by the 3rd generation.
• The Cause: Lack of communication and prepared heirs, not lack of investment returns.
• The Solution: The Family Bank model and values-based education.

Introduction

"Shirtsleeves to shirtsleeves in three generations." The first generation makes it. The second generation enjoys it. The third generation loses it. Available wealth creates entitlement. If you want your legacy to last, you have to prepare the child for the money, not just the money for the child.

Deep Dive: Beyond the Money

Why it Fails

It's not the money. It's the values. If you give a child $10 million but don't teach them work ethic, financial literacy, or stewardship, they will consume it. They become "Trust Fund Babies" in the worst sense.

The Solution: The Family Bank

Don't just give handouts. Create a "Family Bank." Instead of giving your child a Ferrari, you use the family trust to operate as a lender.

• Education: The Trust pays for university, but requires a certain GPA.
• Business: The child wants to start a business? They must pitch the "Family Board" (Successor Trustees) with a business plan. The Trust lends the money at a fair interest rate.
• Housing: The Trust provides a mortgage for a first home.

This teaches responsibility. The money is a tool to be productive, not a toy to be consumed.

Communication

The Rockefeller family meets regularly to discuss the family philanthropy and values. They have kept their wealth for 7 generations. Talk about money at the dinner table. Remove the taboo.

Summary

Prepare the child for the road, not the road for the child. Your legacy is your values; the money is just the amplifier.