Lasting Legacies: Escaping the “Rags to Riches” Trap

The wealth behind the assets.

Families have asked us for guidance through aging, disability and death for nearly 20 years. During that time, we’ve discovered – through trial and error – profound, universal truths that underpin the essence of estate planning—a practice that transcends mere legal documentation and delves into meaning and purpose.

Throughout our journey, we’ve encountered many flawed estate plans but also a few meticulously crafted ones which, despite their apparent perfection on paper, failed when faced with real-life challenges. These sobering client experiences have taught us an important lesson: while legal documents are essential components of any estate plan, they alone don’t guarantee success.

Even the most expertly written legal documents are not enough to ensure a lasting legacy. That’s because the legal documents only create a structure through which your legacy is carried. A legacy is not merely inherited; it’s lived, breathed, and embodied by those who carry it forward, and the best chance you have of leaving a lasting legacy is to memorialize what’s most important in tangible ways.

And therein lies the inherent unpredictability of human nature, particularly during times of crisis or grief.

Having learned important lessons by guiding thousands of families through the process of transferring their wealth to the next generation, we counsel our estate planning clients to determine first why they want an estate plan and second what values that plan will be designed to uphold. Why do you seek to create an estate plan, and what do you to want to accomplish? What values do you wish to instill and preserve through it? By elucidating these underlying motivations and values, we lay the groundwork for a plan that is not only legally sound but also imbued with clarity, purpose, and resilience.

Successful clients create plans around values and goals. Then they communicate, model and memorialize those values…

Our most successful clients create their plan with their values and goals in mind. And then they communicate, model and memorialize those values frequently and consistently.

When looking into financial legacies, research on what happens to the estates of high-net worth individuals points consistently to the same conclusion.

“Seventy percent of family wealth is lost by the end of the second generation, and 90% is gone by the end of the third generation.” Merrill Lynch 2023

This is such a common refrain it has its own tagline, “shirtsleeves to shirtsleeves in three generations.” And Merrill has done us all a great service by asking why. They discovered, like our professional research in estate planning, not only does financial wealth disappear, but it is less likely to disappear to external market forces or economic pressures than to the internal family dynamics.

“Most of the dissipation of wealth isn’t due to the economy or markets, but to factors within the family, such as limited communication and heirs who lack the necessary skill sets to manage wealth.” Merrill Lynch 2023

And, of course, clarity and security are not just for the rich. Everyone deserves a powerful legacy that lasts. No matter the size of your estate, your true wealth is much more than your financial wealth. In the absence of your human capital, your wisdom, values, key stories, and life experiences, the financial capital you leave as a part of your legacy is not sufficient to last most families. What do families that create lasting wealth pass down to the next generation? Financial capital plus human capital, your True Wealth.

Why not leave your loved ones what really matters?

“True wealth is what’s left after the money’s gone.” Catherine Hammond

At Hammond Law Group, we’re committed to helping your family chart a course towards a lasting legacy—one defined not by monetary wealth alone but by the enduring imprint of wisdom, values, and True Wealth. Call today and schedule your TrueWealth Family Legacy conversation with our founder and CEO Catherine Hammond. Protect your TrueWealth Family Legacy today.

Don’t leave your loved ones’ financial futures to chance – take action today and discover how Hammond Law Group can help you build a lasting legacy.