What is a multi-generational financial plan?

When most people think of financial planning, they think of preparing for their own retirement or perhaps setting up a college fund for their kids. But what happens when you want to build something that lasts, not just for your children, but for your grandchildren and potentially their children, too? That’s where multi-generational financial planning comes in.

Unlike traditional financial planning, which often focuses on one individual or couple’s goals and life, a multi-generational financial plan takes a longer-term view to protect and grow wealth. It ensures that future generations are financially secure and guided by the values that built the family’s initial success.

At its core, a multi-generational financial plan is a blueprint for how a family can preserve and grow wealth in a way that benefits both current and future generations. We’ve all heard of the adage “shirtsleeves to shirtsleeves in three generations,” where critical missteps can lead to wealth you’ve built to be squandered without prudent planning. 

This type of planning is complex and involves investment management, estate planning, tax strategy, risk management, and philanthropic goals to create a clear financial roadmap for the family so your family doesn’t fall into that classic trope. Thinking through how assets can be protected against market volatility, how they can be distributed effectively and fairly, and how to prepare heirs to be responsible stewards of their inheritance is the first step toward multigenerational wealth management. 

Planning for generations is not just about maximizing returns—it’s about protecting what’s already been built. That’s where diversification comes in. A well-diversified portfolio can help preserve assets across different market conditions and provide a cushion against unexpected events. The aim is to support sustainable growth over time, rather than chase short-term gains.

Estate planning is a crucial step in making sure that the family’s legacy is carried out accordingly. Trusts, wills, and powers of attorney help ensure that wealth is transferred according to the family’s wishes. More importantly, they help avoid costly legal disputes and reduce the risk of assets being lost to taxes or poor planning.

As of last year, roughly 32% of Americans have an estate plan in place. This gap in long-term planning can have long-term negative impacts for future generations. Having these documents in place preserves wealth and also provides a clear direction and legacy plan that reflects your values and vision for the future.

Taxes can be one of the biggest threats to multi-generational wealth. But with proactive planning, many of these liabilities can be managed or even avoided. Gifting strategies, the strategic use of tax-advantaged accounts, and charitable contributions are all tools that can help reduce the tax burden while supporting causes that matter to your family. Thoughtful tax planning ensures that more of your wealth stays within the family and continues to work for future generations.

Many families who build wealth over time want to do more than pass on money; they also want to pass on meaning. That’s where philanthropy can play a powerful role. Whether it’s establishing a family foundation or supporting causes year after year, philanthropic giving can unite a family around shared values, reinforce a sense of purpose, and leave an impact that goes far beyond the balance sheet.

No two families are alike. Some are navigating the complexities of a family business, while others are balancing the needs of children in very different life stages. Some are focused on education, others on charitable giving. But at the heart of it all, most families share the same vision: to preserve their wealth, values, and opportunities for future generations.

That’s why working with an experienced financial advisor, ideally a Certified Financial Planner (CFP®), who understands the nuances of multi-generational planning is important. It’s not just about running numbers. It’s about listening, guiding, and helping families make intentional decisions that reflect their legacy and aspirations.

At CapWealth we are no stranger to this type of planning. We’ve worked with clients through three and even a fourth generation; we know the complexities that come with this level of planning and look forward to continuing to carry out these legacies for more generations to come.