By Kevin Hengehold
You may have seen statistics about wealth disappearing after one to two generations of transfer. You have almost certainly heard the saying, “shirtsleeves to shirtsleeves in three generations.” The saying outlines the cycle whereby the first generation of a family works hard and makes sacrifices to accumulate wealth and assets. The second generation witnessed their parents struggle, and they recall the frugality of their own childhoods. The third generation, having grown up with comfort and resources, consumes the family wealth.
You’re also probably tired of hearing the “shirtsleeves to shirtsleeves” warning.
The statistics, as well as anecdotes, are alarming, and they can cause conflict between family members. It’s important to remember that, just like having a well-communicated business plan increases the chances of your business’ success, having a well-communicated inheritance plan increases the likelihood of a successful wealth transfer.