For many families, multigenerational financial planning extends well beyond transferring assets from one generation to the next.
Parents and grandparents may spend decades building wealth, establishing trusts, funding education, making charitable gifts, and creating an estate plan intended to provide for the people they care about. People often focus on how those assets will eventually transfer.
Less attention may be given to something equally important: the relationships that will surround the family when that transition occurs.
A son or daughter may someday become a beneficiary, trustee, executor, or agent under a power of attorney. Yet in many families, those individuals have had little meaningful interaction with the financial professionals who helped their parents create the plan.
That can create an unnecessary challenge at the worst possible time.
A Relationship Should Not Begin During a Crisis
Imagine being introduced to your parents’ financial advisor shortly after a death or during a period of incapacity.
At the same time, you may be grieving, helping another family member, locating documents, working with attorneys, retitling accounts, understanding a trust, or trying to determine what needs to happen next. You may suddenly have responsibilities as an executor or trustee with little experience in either role.
Now add another task: developing trust in a financial advisor you barely know.
Even when the advisor has worked with the family for decades, the relationship may feel entirely new to the next generation.
That distinction matters. An advisor can know a great deal about a client’s children without actually knowing them. Over the years, we hear about graduations, careers, marriages, grandchildren, moves, and other milestones. From the advisor’s perspective, those family members can become familiar names.
The children, however, may know little more than the advisor’s name.
A few thoughtful interactions over the years can change that considerably.
Creating Natural Opportunities for Involvement
Bringing the next generation into the financial conversation does not mean sharing every detail of a parent’s finances or involving children in decisions that should remain private.
Instead, families can look for appropriate opportunities to introduce financial concepts, responsibilities, and relationships gradually.
Education planning is one example.
A 529 plan may be established when a child or grandchild is young and remain largely invisible to the beneficiary for years. As college approaches, however, the account becomes much more tangible. Tuition, qualified expenses, distributions, scholarships, and other funding sources all become part of the conversation.
Including an older child or grandchild in an appropriate portion of that discussion can provide an early introduction to financial planning in a context that directly affects their life. The conversation is no longer about an abstract investment account. It demonstrates why the account was created, how years of planning produced a particular opportunity, and how financial decisions translate into real-world outcomes.
Charitable giving can provide another opportunity.
For families with a strong tradition of philanthropy, parents or grandparents may choose to include younger generations in conversations about the organizations and causes they support. Children might be invited to research a charity, discuss why a particular cause matters to the family, or help direct a portion of the family’s annual giving.
The objective is not simply to teach the mechanics of charitable giving. It is also an opportunity to communicate the values behind the family’s financial decisions.
Smaller investment accounts can serve a similar purpose. They can provide a practical setting for conversations about risk, diversification, time horizon, market volatility, and the difference between investing and speculation. Concepts that can seem theoretical become much easier to understand when attached to an actual account and a real objective.
Preparing Future Fiduciaries
Perhaps the most important opportunity involves estate planning.
A well-drafted estate plan can identify who will serve as trustee, personal representative, or agent under a power of attorney. A legal document, however, cannot give someone experience.
People accepting these responsibilities should have at least a basic understanding of the role they may someday be asked to perform.
That does not necessarily require disclosing account balances, inheritance amounts, or other information a client would prefer to keep private. It may simply mean making introductions and discussing responsibilities.
Who are the family’s attorney, accountant, and financial advisor? Where are important documents maintained? What does a trustee actually do? Who should be contacted if a parent becomes incapacitated? What decisions might an agent under a power of attorney eventually face?
Those conversations can be uncomfortable because they require families to contemplate circumstances they would rather not face. But having them in advance can make an enormous difference later.
When the time comes, a child should ideally not be searching through files trying to determine whom to call.
A familiar voice should already be on the other end of the phone.
From Financial Planning to Family Stewardship
Over time, these interactions can lead to broader conversations about family stewardship.
Families that have accumulated significant assets eventually face questions that go beyond investment performance. What responsibilities accompany inherited wealth? What values does the family hope to carry forward? How should younger generations think about giving, spending, investing, and preserving assets? Which lessons learned by one generation are worth passing on to the next?
There is no single correct way to approach those conversations. Some families are very open about money. Others prefer considerably more privacy. Both approaches can work.
The important point is that preparation does not need to begin with a detailed discussion of net worth or inheritance.
It can begin with familiarity.
A college funding conversation. A charitable decision. An introduction to the family’s attorney. A discussion about serving as trustee. A meeting with the financial advisor who has worked with Mom and Dad for many years.
Individually, those moments may seem small. Together, they can build a relationship long before anyone needs to rely on it.
Planning for More Than the Transfer of Assets
Successful multigenerational planning is not simply about moving assets efficiently from one generation to another.
It is also about preparing people.
Estate documents can establish authority. Trusts can establish structure. Investment accounts can hold and transfer assets. But families ultimately depend upon people to understand the plan, make decisions, communicate with one another, and carry out the responsibilities they have been given.
For families thinking about the legacy they hope to leave, an important question may therefore be surprisingly simple:
Do the people who may someday be responsible for this plan know the people helping us manage it today?
If the answer is no, there may be value in making those introductions sooner rather than later.
At Howland and Associates, we have had the privilege of working with families across different stages of their financial lives. When appropriate, we welcome the opportunity to include children and grandchildren in conversations that can help them better understand the planning, responsibilities, and values that may one day become part of their own financial lives.
Frequently Asked Questions
What is multigenerational financial planning?
Multigenerational financial planning considers how financial decisions, responsibilities, and relationships may extend across multiple generations of a family. It can include estate planning, education funding, charitable giving, investing, and preparing family members for responsibilities they may eventually assume.
When should children be introduced to the family’s financial advisor?
There is no single right age or time. Families may look for natural opportunities as children become adults, such as discussions about college funding, investment accounts, charitable giving, or future estate planning responsibilities. An introduction does not require parents to disclose account balances or other financial information they prefer to keep private.
What should a future trustee or personal representative know?
Someone who may eventually serve as a trustee, personal representative, or agent under a power of attorney should have a basic understanding of the role and know whom to contact when help is needed. It can also be useful for them to know where important documents are maintained and who the family’s attorney, accountant, and financial advisor are.
Do parents need to disclose their finances to involve the next generation?
Not necessarily. Families can begin building familiarity without discussing net worth, account balances, or expected inheritance amounts. Introductions to trusted professionals and conversations about responsibilities, values, and financial concepts can be useful starting points.