It is often considered that the first generation creates wealth, the second generation lives off it and the third spends the remainder. Of course, this is not true for all families.
In "Preparing for Inheritance: How to Avoid Losing It All," Barron's points out that 70% of a family's wealth is lost in the second generation and 90% of the wealth is lost in the third generation after an initial inheritance.
Some wealthy families continue to amass wealth generation after generation. The article points out how this occurs: the families that continue to thrive leave an "intellectual inheritance" for heirs.
Consequently, they educate their heirs about the family's legacy and values. They have conversations with their heirs about how the wealth was generated and why it is so important that it be maintained through continued hard work.
Think about this when you are creating your own estate plan.
While an expert estate plan prepared by a professional goes a long way, it is also important for future generations to have intellectual inheritance as well as wealth.