Discover strategies for building, preserving, and transferring generational wealth. Learn how EP Wealth financial planners help families set a plan to secure lasting legacies.

How To Build Generational Wealth

Building generational wealth is about more than accumulating assets—it’s about creating opportunities and financial security for future generations. For high-net-worth individuals, this requires a strategic approach to growing, preserving, and transferring wealth.

At EP Wealth, we help families craft personalized financial plans aimed at supporting their long-term goals. From tax-efficient investing and financial strategies for estate planning to education funding and wealth preservation, we provide the guidance and tools intended to secure your financial legacy.

With careful planning, you can pass on your wealth, values, and traditions to the next generation with confidence and a sense of control.

What Is Generational Wealth?

Generational wealth isn’t just about leaving money to your children or grandchildren—it’s about creating a legacy that grows over time. While it includes tangible assets like cash, real estate, investment portfolios, and valuable possessions, it can also encompass business ownership and intellectual property.

Equally important are the intangible elements: passing down financial knowledge and money management skills that empower future generations to build upon what you’ve created. By combining assets with education, you can set the stage for a “wealth snowball” that gains momentum with every generation.

5 Steps for Growing Wealth

Building wealth starts with the basics: saving consistently, investing wisely, and keeping an eye on the future. Each decision you make today lays the groundwork for long-term financial growth. Here’s what to focus on:

Invest Strategically: Diversify your portfolio to balance risk and reward while aiming for long-term growth. Consider assets like stocks, bonds, real estate, and private equity.
Maximize Tax Efficiency: Use tax-advantaged accounts such as IRAs, 401(k)s, and HSAs, and implement strategies like tax-loss harvesting to increase after-tax returns.
Expand Income Streams: Look beyond traditional investments to create multiple revenue sources, such as rental income, dividends, or business ventures.
Reinvest Earnings: Leverage the power of compounding by reinvesting dividends and capital gains into your portfolio.
Education Funding: Plan for future generations by investing in education-focused accounts like 529 plans, boosting both family wealth and opportunity.

5 Steps for Preserving Wealth

Preserving wealth is about protecting what you’ve built while preparing for unexpected risks. These steps can potentially help safeguard your assets:

Risk Management: Diversify investments to mitigate market volatility and consider insurance to protect against financial losses or liabilities.
Wealth Protection Strategies: Use trusts, LLCs, or other legal structures to shield assets from creditors or lawsuits.
Tax Planning: Stay ahead of tax liabilities by working with advisors to minimize costs through charitable giving, deductions, and tax-efficient income strategies.
Liquidity Management: Maintain cash reserves to cover emergencies or capitalize on opportunities without disrupting long-term investments.
Regular Reviews: Periodically assess your financial strategies and adjust for changes in market conditions, tax laws, or personal circumstances.

How to Transfer Wealth to Future Generations

Transferring wealth effectively requires minimizing taxes, avoiding legal complications, and maintaining family harmony. These steps can include:

Establishing an Estate Plan

Create wills, trusts, and powers of attorney to designate how assets will be distributed. A revocable living trust, for example, allows you to manage and adjust your assets during your lifetime while avoiding probate after your passing. You can also use a durable power of attorney to authorize someone you trust to make financial or healthcare decisions on your behalf if you become incapacitated.

With a comprehensive estate plan in place, specific assets such as family businesses or real estate are handled in ways that align with your long-term goals and family dynamics.

Gifting Strategies

Utilize annual and lifetime gift exclusions to transfer wealth during your lifetime while reducing tax liabilities. Annual exclusions allow you to gift a set amount per recipient each year without incurring gift taxes, making it possible to transfer substantial wealth if multiple heirs are involved. The lifetime exclusion permits even larger tax-free transfers, ideal for significant assets such as real estate or business interests.

By leveraging these tools strategically over time, you can potentially reduce the size of your taxable estate while giving your beneficiaries a financial foundation to build on.

Trusts for Wealth Transfer

Set up family trusts, charitable trusts, or generation-skipping trusts to protect and allocate assets. A family trust can provide for children or other dependents, while keeping the assets shielded from creditors or lawsuits. Charitable remainder trusts allow you to donate assets to a cause you care about, with the added benefit of providing income for yourself or your family during your lifetime.

Generation-skipping trusts allow wealth to pass directly to grandchildren, avoiding estate taxes that would otherwise be incurred at the children’s level. Trusts are highly customizable, allowing you to set specific conditions for disbursements, such as education funding or age-based milestones.

Philanthropy

Incorporate charitable giving into your financial plan to support causes you value and benefit from potential tax deductions. Donor-advised funds let you donate assets now, receive an immediate tax deduction, and decide later how and when to distribute funds to charities.

Establishing a private family foundation provides greater control and allows you to involve heirs in philanthropic efforts, fostering a legacy of giving. Contributions of appreciated assets, such as stock, can help you potentially avoid capital gains taxes while managing the value of your donation.

Educating Beneficiaries

Provide heirs with financial literacy training to help them responsibly manage and grow their inheritance. Set up family meetings to review the estate plan and clarify its intentions, reducing the potential for misunderstandings. Consider including younger generations in philanthropic decisions or smaller investment opportunities to give them hands-on experience. Partnering them with trusted advisors can help reinforce good financial habits and prepare them for larger responsibilities, such as managing trusts or overseeing family businesses.

The Role of a Financial Planner

EP Wealth can play a crucial role in helping you shape your family's financial future. Our financial planning professionals create personalized plans for strategically managing your wealth over time, guiding you through the necessary steps to efficiently transfer your assets to future generations.

Investment Management

Our advisors tailor your investment management strategy to your specific financial objectives. We consider your short- and long-term needs and build a diversified portfolio to help you reach those milestones. We also consider your personal goals, such as funding major expenses for children or grandchildren, business transitions, and charitable giving. Your advisor regularly reviews your investment portfolio and rebalances your investments as your goals and market conditions shift.

Retirement Planning

A financial strategy for multi-generational wealth should effectively prepare the members of this generation for retirement before looking ahead to the next. EP Wealth advisors take time to understand what a happy retirement means to you and where you currently stand with your finances.

From there, we prioritize the necessary steps to help you towards achieving your future goals, including investing in a portfolio that reflects your risk tolerance and overall financial objectives. The earlier you start saving and investing for retirement, the more time your money has the potential to grow.

Business Planning

A business can provide a steady income stream for families and be passed down from generation to generation. EP Wealth offers customized business planning services to help owners set clear goals, stay compliant with local and federal tax regulations, and protect against risk with insurance and other safeguards.

We conduct business analysis to help your company identify growth opportunities. We also review your corporate structure to help your team operate efficiently. As you scale your business, we help you navigate growth periods and put succession plans in place to make the transition to the next generation intended to be as smooth and seamless as possible.

Financial Strategies for Estate Plans

Estate planning is a critical step in safeguarding your family’s financial future. It involves more than just deciding on inheritances and beneficiaries. EP Wealth planners collaborate with estate attorneys to establish trusts, gifting strategies, and other structures that protect your assets while facilitating a seamless transfer of wealth. For families with philanthropic goals, we can help integrate charitable giving into your estate plan in a way that supports your values while reducing tax liabilities. Our advisors also work closely with families to educate heirs, giving them the financial knowledge to manage and grow the wealth they inherit.

Tax Strategy

Minimizing tax burdens is one critical factor to preserving and transferring wealth. EP Wealth advisors develop tax strategies to address everything from income and capital gains taxes to estate and gift tax considerations. Your advisor can recommend strategies aimed to help you maintain your current tax bracket, such as making retirement contributions or donating to your favorite organizations. By strategically timing income recognition and managing charitable contributions, we help to potentially reduce the erosion of wealth by taxes. This can allow more of your financial resources to be used to support your heirs.

Managing Obstacles to Generational Wealth

Whether you are the first to attain generational wealth or have benefitted from the legacy of past generations, gaining or maintaining family assets can be challenging. EP Wealth advisors understand these obstacles and want to help you surmount them.

Overconcentration in a Single Asset - Holding too much wealth in a single investment, such as company stock or real estate, can leave your portfolio vulnerable to market downturns or economic shifts. Diversifying your assets helps spread risk and manage long-term growth.

Insufficient Estate Planning - Without a clear estate plan, your heirs may face legal disputes, unnecessary taxes, or probate delays. Establishing trusts, wills, and gifting strategies can help with a smooth transfer of wealth and potentially reduces tax burdens.

Tax Liabilities - High earners and business owners often encounter significant tax obligations that can shrink their wealth. Proactive tax planning, including charitable giving and tax-efficient investments, can possibly mitigate these impacts.

Lack of Financial Literacy in Heirs - Passing on wealth without educating heirs about money management increases the risk of financial mismanagement. Providing financial education and involving heirs in the planning process can prepare them with ways to preserve and grow their inheritance.

Health and Long-Term Care Costs - Unexpected medical expenses or long-term care needs can drain resources. Including healthcare planning and long-term care insurance in your financial strategy safeguards your wealth from these potential setbacks.

Economic Uncertainty - Inflation, market volatility, and economic downturns can impact investment performance. Regular portfolio reviews and adjustments help keep your strategy on track in changing economic conditions.

Business Succession Challenges - For families with significant wealth tied to a business, poor succession planning can lead to conflict, loss of value, or even business failure. A detailed succession plan can help through the transition and may preserve the business’s contribution to generational wealth.

At EP Wealth, our advisors specialize in helping families identify and manage these obstacles, creating tailored strategies aimed to safeguard and grow wealth for generations to come. Contact an EP Wealth advisor near you to take the first step toward building a bright financial future for you and your loved ones.

DISCLOSURES:

EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.

How to Build Generational Wealth

Financial Education Personal Finance Wealth Management Estate Planning | March 26, 2025

About the Author