Mammoney - Your Ultimate Guide to Personal Finance & Investing

How Rich Families Stay Rich: The Role of Governance and Legacy Planning Introduction In an era where immense fortunes are amassed through entrepreneurship, innovation, and strategic investments, the perpetuation of wealth across generations remains a profound challenge for affluent families. Historical patterns reveal that wealth accumulation is often fleeting; studies indicate that approximately 70% of wealthy families lose their fortunes by the second generation, escalating to 90% by the third, primarily due to a lack of structured mechanisms to manage and transfer assets effectively. This phenomenon, often encapsulated in the proverb "shirtsleeves to shirtsleeves in three generations," underscores the vulnerability of family fortunes to dissipation through poor decision-making, internal conflicts, or inadequate preparation. Family governance and legacy planning emerge as critical safeguards, providing formalized frameworks that align family members' interests, preserve...