If you are reading this, you likely already know the grim statistic: 90% of wealthy families lose their fortune by the third generation.
For decades, the wealth management industry responded to this fear with better legal structures—more airtight trusts, sophisticated tax arbitrage, and complex offshore entities. Yet, the fortunes kept dissipating. Why? Because legal structures protect assets, but they do not protect legacy.
As we move into 2025, a massive shift is occurring in how Ultra-High-Net-Worth (UHNW) families approach the future. We are seeing a move away from “estate planning” (which is transactional and focused on death) toward “legacy design” (which is living, breathing, and focused on continuity).
Here is what the most successful UHNW families are prioritizing right now to ensure their impact lasts not just for a lifetime, but for a century.
1. The “Soft” Legacy is the Hardest Part
Most families spend 50 hours a year discussing investment returns and 50 minutes discussing family values. This ratio is the primary driver of the “shirtsleeves to shirtsleeves” phenomenon.
In 2025, the trend is Formalized Family Governance. This isn’t just a casual dinner conversation; it is a structured business-like approach to the family unit.
- Family Constitutions: A written document outlining the family’s mission, values, and the responsibilities that come with the wealth, not just the rights to it.
- The “Bank of Mom and Dad” Policies: Clear, pre-agreed rules on how family members can access capital for business ventures or homes, preventing emotional friction and entitlement.
- The Annual Retreat: A dedicated time away from daily life to educate the next generation (G2 and G3) on financial literacy, philanthropy, and the family history.
2. Preparing the Heirs, Not Just the Assets
Warren Buffett famously said he wanted to leave his children “enough money so that they would feel they could do anything, but not so much that they could do nothing.”
The modern UHNW approach is to view heirs as stewards, not merely beneficiaries. This involves:
- “Skin in the Game” Philanthropy:Giving younger generations a small, separate foundation or Donor-Advised Fund (DAF) to manage. Let them make mistakes with $50,000 so they don’t make mistakes with $50 million later.
- Emotional Readiness Audits:Working with industrial psychologists or wealth coaches to assess if heirs are psychologically prepared for the weight of sudden wealth.
- Incentive Trusts: Structuring distributions to match productive behaviors (e.g., matching a salary earned, funding a business launch) rather than unconditional allowances that breed dependency.
3. The 2026 Sunset Clause: The Clock is Ticking
While the “soft” side is crucial, we cannot ignore the math. The current U.S. estate tax exemption (roughly $13.61 million per individual in 2024, rising slightly in 2025) is set to sunset on January 1, 2026. Without Congressional action, this exemption will be cut effectively in half.
For a married couple with a $100M+ estate, doing nothing could result in an additional $10M to $12M in federal estate taxes overnight.
- The Move: 2025 is the “use it or lose it” year. We are seeing a rush of Spousal Lifetime Access Trusts (SLATs) and Intentionally Defective Grantor Trusts (IDGTs) to lock in the current high exemptions before the window closes.
4. Philanthropy as a Unifying Force
In the past, philanthropy was often a check written at the end of the year for tax deduction purposes. Today, it is the “glue” that holds the family together.
Impact Investing is replacing traditional check-writing. The rising generation (Gen Z and Millennials) is often less interested in having their name on a building and more interested in measurable impact. They want to see how the family capital is solving climate change, curing disease, or addressing inequality. Aligning the investment portfolio with these values prevents the next generation from rejecting the family wealth due to ethical misalignment.
5. Privacy and Security: The New Wealth Defense
In a digital age, high-net-worth individuals are targets. Legacy planning now includes a robust Digital Defense Strategy.
- Cybersecurity Audits: Are the family office servers secure? Do the grandchildren have 2FA on their social media accounts?
- Reputation Management:Scrubbing private data from public brokers and establishing protocols for what information is shared online.
- Kidnapping & Ransom (K&R) Insurance: Unfortunately necessary for globally mobile families, but often overlooked in standard policies.
The Verdict: It’s Time to Have the “Big Talk”
The families that successfully navigate the next 20 years will be the ones who treat their family human capital with the same rigor they treat their financial capital.
If you haven’t reviewed your plan since 2020, it is already outdated. The world has changed, tax laws are about to change, and your family has likely changed, too.
Your Legacy Checklist for This Month:
- [ ] Schedule a “State of the Union” family meeting. (Not about numbers, but about vision).
- [ ] Review your estate tax exposure specifically regarding the 2026 sunset.
- [ ] Ask your heirs: “What causes do you care about?” and listen to the answer.
