5 Ways to Protect Your Wealth for Future Generations

Published On : 05/17/2022

Inflation in the recent years has been far worse than it has ever been. The situation has led to concerns in numerous people about their financial security and worries of providing for their future generations. The downward spiral of the economy is unfortunate and the projections aren’t as promising either.

It’s our inability to plan ahead that causes us immense suffering. A senior citizen who manages to earn a living his whole life is a sorry sight to behold when he has nothing planned for the retirement. Even pitiful is when helpless parents try to put food on the table for their children on an income that barely helps in making ends meet.

On the other hand, there are others who have managed to eke out a better living in spite of the odds. Rather than being beset by the tumultuous times, they have managed to leverage it, somehow, in their favor.

The existence of success stories suggests that it’s possible to protect one’s wealth even under these trying times.

To make sure that your heirs get their share of the inheritance, you have to make an effort to know a little about trusts and wills, and the legal processes involved in both. The following tips will help you safeguard your wealth for your future generations.

Trust funds

A trust fund is a legal entity that can contain money, bank accounts, businesses, property, heirlooms, stocks, and any other investment types. Trust funds are not only widely used by the wealthy to protect their wealth but by every person who wishes a secure wealth transfer to his/her heirs.

To understand the legalities of a trust fund, it’s better to get in touch with a financial attorney, who will not only tell you about how does a trust fund work but also guide you on setting one up for yourself.

Trusts are not only useful for protecting your assets from creditors or lawsuits but also for estate taxes. Setting up a fund ensures the money you leave behind will be distributed among the beneficiaries according to your wishes.

The person who establishes the trust fund (Grantor) decides who the beneficiaries will be and what each beneficiary will receive. A trustee will manage the trust’s assets and makes sure they are preserved for the benefit of those who are named in the document as beneficiaries.

Prepare for the unexpected

One thing we can all agree on is that no one knows what tomorrow brings. Even if we think we know what’s coming up next year or even five years from now, there’s always a chance of something unexpected happening — including death or disability — that could compromise our ability to work or provide for ourselves financially.

This is why it’s important not just to save money but also to prepare for emergencies through insurance coverage, like health insurance, life insurance, disability insurance, and even long-term care insurance if needed.

If anything happens to you, these insurance policies will ensure that your family doesn’t suffer financially. You can also consider additional insurance coverage for financial protection in case a medical emergency arises.

For example, disability protection insurance (also known as long-term care insurance) provides cash benefits if you become disabled or are unable to work due to some illness or injury.

Clear all debts

Statistics show that nearly 80% of American households are under debt, and average debt due on every American citizen is around $38,000. Debts are hard to pay off due to high interest rates. To secure yours and your family’s financial future, you must eliminate all forms of debt within your own lifetime.

Paying off any outstanding debts can free up capital for investment and provide a shield against market fluctuations. If you have any outstanding loans, pay them off as soon as possible, so that your future generations don’t have to bear the burden of paying them off.

You can start by paying off high-interest loans and credit card bills outstanding. By siphoning off portions of the debt every month, you can ensure the interest rate on those debts also comes down.

Invest in real estate

Holdings in commercial property have historically outperformed other asset classes. The three main types of property investment are: commercial, residential, and agricultural — each with its own sets of risks and rewards.

The first thing to consider when looking at a real estate investment is whether or not you have enough money saved up to pay for the down payment.

The more money you put down on the house, the less you will have to pay in interest later. But once everything is worked out, real estate is a good investment that guarantees passive income and tax advantages.

The Federal Reserve Bank of St. Louis’ graph plots median prices of homes since 1963. Apart from a few dips during the recession, the prices have been seen a steady upward trend. The trend indicates an appreciation in the wealth of people that are invested in real estate.

Teach children financial responsibility

People who have built significant wealth have done so through hard work and by enduring tough times. Financial security ensures provision of a better livelihood for your progeny.

The children of financially responsible fathers or grandfathers aren’t as financially literate. Born into wealth, they haven’t lived through the struggles of wealth accumulation and, therefore, are often reckless when it comes to spending.

There are many different ways children can learn about the value of money.

• Involve your children in charitable endeavors to inculcate values of giving, compassion, and rational spending.
• An allowance with restrictionsteaches kids how to save, spend, and manage their money effectively. However, if you give your child a freehand in terms of spending, there’s a chance they’ll spend it frivolously on inessential objects or activities. Set up rules that limit how much money they can spend each week or month, so they’re forced to save and shop only for the essentials.

Conclusion

Ensuring your financial security will make you happier in the long run. You will not only be able to look after your own needs when retirement rolls around but you will also be able to set up trust funds in your children’s names. You should also get your possessions insured in case the unexpected happens. It’s best you pay off all your debt within your own lifetime, so your children don’t have to worry about it. Real estate is always a good investment choice and saves your money from unnecessarily depreciating. And lastly, your hard-earned wealth should go into facilitating your children and grandchildren in pursuing their life goals. Make sure you have inculcated the right money habits in them during their formative years, so they can be a little more responsible with your wealth once it is handed over to them.

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Jessica Weisman-Pitts

Jesse Pitts has been with the Global Banking & Finance Review since 2016, serving in various capacities, including Graphic Designer, Content Publisher, and Editorial Assistant. As the sole graphic designer for the company, Jesse plays a crucial role in shaping the visual identity of Global Banking & Finance Review. Additionally, Jesse manages the publishing of content across multiple platforms, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.