Managing Generational Wealth

Passing down generational wealth can set up your younger family members for success. When you’re leaving behind your financial legacy, you want to do it intentionally so your loved ones receive the most they can. Here are some initial steps to consider while managing generational wealth. 

1. Start growing your money now. Make the most of your cash by putting it in high-yield savings accounts. This is an easy way to be able to leave more money for the next generation. Review your current accounts and see where you could transfer money to a high-yield savings option.

   At Dominion Energy Credit Union, you can earn one of our best rates with our Wealth Maximizer Money Market Savings account. This lets you earn high dividends while also having easy access to your funds. If you don’t need to worry about access, you can consider opening a Savings Certificate to earn even more. This will allow you to lock in a high rate for a set term. If you can, open both a Money Market account and a Savings Certificate and diversify your portfolio. It’s a great way to balance your money to keep some accessible while protecting against changes in a single market occurrence.

2. Educate your loved ones. Transferring generational wealth works best when it goes beyond just passing down cash – make sure you’re passing down wisdom as well. You have valuable information for others to know! Share the lessons you’ve learned, mistakes you’ve made and how you’ve grown yourself to be financially successful. This will help your inheritors manage your wealth successfully and be able to continue the pattern of generational wealth. Share our financial resources with your loved ones so they can start on the right path.

   You can also teach your loved ones about your philanthropic efforts. Charitable donations often give tax breaks, so they’re financially smart, but they also build a family legacy. The next generation can continue to support your favorite charities to preserve your memory and feel close to you while also positively managing money. 

3. Plan ahead with professionals. Creating the best plan for transferring generational wealth can be confusing to navigate. By planning ahead now with financial and legal professionals, you can confidently know that your hard-earned savings will be carried on and may reduce the taxes your inheritors have to pay. The more you can plan for now may also reduce the time it takes to settle your estate. A clear, detailed plan will give you confidence in the wealth you’re leaving behind! Start with these three main areas: 
   • Estate Planning – This is more comprehensive than just a will. Along with your will, an estate plan should include designating power of attorney, your advanced healthcare directive, all trusts, appointing an executor and any other documents that help pass on your assets. 
   • Taxes – Plan ahead for any taxes that the next generation may have to pay upon receiving their inheritance. There are ways you can strategize to reduce these taxes and preserve your assets when they transfer. Speak with a professional to learn about different possible strategies.
   • Life Insurance – Life insurance is a simple way to leave behind money that is tax-free and could help cover estate taxes. If you already have a plan, ensure you’ve reviewed your policy and beneficiaries to see if it’s up to date. You should review your life insurance policy at least once a year but especially after any major life events involving changes to your family, finances or health. This gives you the opportunity to see if you need any changes and protects you from having too little coverage or paying for coverage you don’t need. 
4. Communicate your wishes. The best way to ensure your wishes are carried out is to have regular meetings with your loved ones and update any financial or legal professionals you work with. This will instill confidence in everyone by knowing what you want and reduce the chance of any family conflicts. This is also a great opportunity to designate someone to have power of attorney, should you ever need help managing your finances. 

Managing your wealth can be difficult, but the first step is making sure your money is in the right spot. DECU is here to help you maximize your savings! Confidently know your money is growing at a high rate and contact us today at 800-268-6928 to learn more about our savings options. 

_{The opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which insurance product(s) or investment(s) may be appropriate for you, consult your financial professional prior to purchasing or investing.}