How To Start Building Generational Wealth This Year

As we step into the new year, many business owners and families who have built significant wealth are reflecting on the legacies they wish to leave behind. (And if you aren’t – here’s your sign that you should be).

One thing I remind my clients all the time: true wealth isn’t just about accumulating assets; it’s about striving to ensure that your financial success serves your family and future generations. 

Ready for this year to be the year you begin elevating your legacy even more? Here are a few strategies that can help you build out your family’s generational wealth.

1. Define Your Legacy

The first step in building generational wealth is to clarify what it means to you.

Is it about feeling confident in the financial futures of your children and grandchildren?

Is it about philanthropy?

Or is it more about ensuring family values are passed down alongside wealth?

Having a well-defined vision will guide your decisions and investments.

2. Leverage Tax-Efficient Strategies

Taxes can erode wealth quickly if not properly managed. Consider these tactics to help preserve more of your assets:

• Gift Strategically: Take advantage of each year’s annual gift tax exclusion to transfer wealth tax-free to your heirs.
• Establish Trusts: Trusts can help you control the distribution of assets, minimize estate taxes and protect beneficiaries from financial mismanagement.
• Roth Conversions: If appropriate, converting traditional retirement accounts to Roth IRAs can potentially create tax-free income streams for your heirs.

3. Invest with Purpose

A well-diversified investment portfolio aligned with your long-term goals is another idea to consider. A few ideas include:

• Alternative Investments: Private equity, real estate, and other alternative assets can provide additional growth opportunities and potentially hedge against inflation.
• Impact Investing: Align your portfolio with your values by investing in companies and causes that matter to you.
• Legacy Investments: Consider income-generating assets, such as dividend-paying stocks or rental properties, to provide ongoing financial support for your family.

4. Educate the Next Generation

Passing on wealth is only part of the equation; another wise “investment” is making sure you pass on the knowledge to manage that wealth wisely. I recommend proactively scheduling and facilitating family meetings to discuss:

• Financial literacy basics
• The importance of charitable giving and philanthropy
• How to steward family wealth responsibly

Many families also engage a financial advisor to provide education and guidance to heirs, helping them feel more prepared for the responsibilities that come with significant wealth.

5. Review and Update Your Estate Plan

An outdated estate plan can lead to unnecessary taxes, legal challenges and other unintended consequences. Make this year the year you:

• Update your will and trusts to reflect your current wishes
• Revisit beneficiary designations on retirement accounts and life insurance policies
• Double-check the alignment between your estate plan and current tax laws

6. Incorporate Philanthropy

For many families, giving back is a cornerstone of their legacy. Explore charitable vehicles like donor-advised funds or private foundations to:

• Maximize tax benefits
• Involve your family in philanthropy
• Make a lasting impact on causes you care about

7. Work with Trusted Advisors

Building generational wealth requires a team of skilled professionals who understand your unique situation. Your financial advisor, estate attorney and tax professional should work together to create a cohesive strategy tailored to your goals.

Generational wealth isn’t built by chance—it’s the result of thoughtful planning and intentional action. By taking steps now, you can help create a financial future for your family that goes hand-in-hand with a lasting legacy that extends far beyond your lifetime.

Don’t know where to start? We’d be happy to sit down with you to develop a personalized financial plan that aligns with your vision for the future. Reach out to me today to get started.

Any opinions are those of Jeff Green and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

This information was provided in part by AI.

Roth Conversions: Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Alternative Investments involve substantial risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. These risks include but are not limited to: limited or no liquidity, tax considerations, incentive fee structures, potentially speculative investment strategies, and different regulatory and reporting requirements. There is no assurance that any investment will meet its investment objectives or that substantial losses will be avoided.