Educating the Next Generation About Family Wealth

Month: September 2025

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Educating the Next Generation About Family Wealth

Over the next few decades, an enormous amount of wealth is expected to pass from older to younger generations. This has been dubbed the “Great Wealth Transfer,” and one estimate suggests that $124 trillion will change hands by 2048. It’s an eye-popping figure, to be sure, but it also highlights the reality that many families are, or soon will be, navigating how to pass on their wealth. A top-of-mind question: Is the next generation ready to take on the responsibility?

Wealth is not just cash in the bank; it can include investments, real estate, businesses and more that require stewardship and foresight. Successful management means preserving and growing assets and using them wisely. Striking the right balance here is key: For the next generation to succeed, it takes intentional preparation and education.

Plant the Seeds of Financial Literacy Early

Where to begin? In an ideal world, financial education starts in early childhood and is treated as an open and ongoing conversation as kids age. The goal is to build financial literacy gradually, so wealth management feels natural rather than overwhelming.

When kids are young, this might mean introducing simple topics like the difference between saving and spending. Managing an allowance can help put those ideas into practice. As kids get older you can begin introducing more complex topics, such as investing, compound interest, debt and taxes.

It’s equally important to engage adult children, many of whom may have received no other formal financial education. While 29 states now have K–12 financial education requirements in public schools, this focus has largely come to the forefront only in the last few years. If your kids are adults now, they may have missed out. So it’s worth finding out what they know, what they don’t know and what they’d like to know more about.

Putting Structure Around Family Wealth Education

In addition to ongoing conversations about money, your family might benefit from more intentional ways of building financial literacy. Some families hold regular financial meetings where they share goals, key issues and address questions or concerns. Others put together more formal workshops with wealth advisors or other experts.

There also is a wealth of credible educational content online that is built to both educate and engage audiences around financial literacy topics.

Turning Wealth Conversations into Real-World Experience

Eventually, theory should give way to practice. As younger family members learn the basics, you might consider providing a "practice portfolio," giving them the chance to make investment decisions with small amounts of money and learn from their successes and mistakes.

When family members have honed their knowledge, consider assigning them real responsibilities that match their skills and interest. This might mean relatively simple tasks like helping guide gifts made through a donor-advised fund. Or these responsibilities could be more involved, such as taking a role in the family business or helping to make investment decisions with the family’s wealth. With your guidance and oversight, these experiences can help develop confidence and capability.

Grounding Family Wealth in Purpose and Values

One of the most important things that helps guide families on how to grow and spend wealth is imparting a strong value system. Values can help you frame wealth as a tool rather than a goal.

Your values will be unique to you, but some worth considering may be:

  • Stewardship: Recognizing the responsibility that comes with wealth. Stewardship encourages careful management and intentional choices so resources can benefit both current and future generations.
  • Giving back: Using wealth to help create positive change in your community and the greater world.
  • Self-worth beyond wealth: Remembering that wealth is a tool to achieve goals—whether gaining an education, pursuing passion or giving back, for instance—not a measure of personal value.

 

By grounding financial decisions in values, families can help prevent counterproductive or reckless financial decisions, foster responsibility and ensure wealth is not seen as something to be simply consumed.

Keeping Family Wealth Conversations Going Across Generations

Discussing money isn’t always easy, and for many families, it’s downright taboo. While 66% of Americans say conversations about wealth are important, 62% say they never have them.

But getting over this hurdle is incredibly valuable. The most successful families treat wealth education not as a one-time event, but as an ongoing process that evolves as your family grows and your financial picture changes. We can work with you to create an environment where family members can openly discuss the unique challenges and opportunities that come with wealth.

If you’re thinking about how to prepare the next generation for responsibility—not just inheritance—we’re happy to help.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.

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Why Business Exit Planning Matters

If you’re a business owner, business exit planning eventually becomes essential. Whether you sell to an outside buyer, family, or employees, the question is whether you can exit on your own terms. The reality is that most business owners don’t have a clear, documented exit plan. And if you find yourself among them, you could find it leaves you in a tight spot when it’s time for you to step down.

Delaying planning your exit risks settling for a below-market sale price, losing control of choosing your successor or rushing into choices that don’t reflect your vision. Delays also leave you with little time to take steps to boost the business’s valuation and ensure business continuity. A clear exit plan helps maximize options and value. If you haven’t mapped out yours yet, there’s no time like the present. Consider these steps:

Put a Price on Your Business

Proper valuation of your business is the first step in exit planning. Some back-of-the-envelope math can provide a decent starting point. But to really understand what your business is worth, meet with a valuation expert. Besides a healthy dose of objectivity, these professionals bring market expertise and a knowledge of valuation standards. They can identify intangible sources of value you may have overlooked and help ensure your valuation passes muster with potential buyers and the IRS.

There are three main approaches to determining value:

  • The asset approach adds up the value of your company’s tangible and intangible assets, then subtracts liabilities.
  • The income approach calculates value according to your business’s expected future cash flows.
  • The market approach compares your business to recent sales of similar companies.

 

You may find one approach is more apt than another for the type of business you own, but a comprehensive valuation is likely to incorporate all three in one way or another. Bear in mind that valuation isn’t a one-time event. As your business grows and market conditions change, you’ll likely want to update your valuation.

Clarify Your Vision

Before you can build an effective exit plan, it’s necessary to clarify your goals. Be as specific as possible as you define what a successful transition looks like to you.

Some questions to keep in mind: Do you want to maximize the sale price, selling at the highest price possible? Do you intend to keep the business within your family or pass it to a handpicked successor? What are your obligations to employees? Is it important that your business maintains a consistent set of values when you’re gone? What timeline makes sense for you? How involved—if at all—do you want to be with the business after you exit?

The answers to these questions will guide the decisions that follow. They can be deeply personal, and we’re here to be a resource as you consider what’s truly important to you.

Shape Your Exit

With valuation and goals in hand, there are a range of steps you can take to support your transition. What you do will depend largely on the type of exit you’re planning. For some owners, you might make strategic adjustments to boost the value of your business, such as reducing unnecessary expenses or diversifying revenue streams to make your company more attractive to buyers.

If your plan involves transferring the business to a family member or a long-time employee, the sooner you identify them, the better. That way you’ll have plenty of lead time to train them in the leadership skills necessary to provide a smooth handoff.

Seeking an external buyer? Preparation is equally as important. In addition to boosting your valuation, you’ll need to organize your financial records, legal documents, contracts, employee agreements and operational procedures. One thing to consider is the type of deal structure that works best for you: Would you like to be paid over time or in one lump sum? And would you like to exit the company immediately or would you be open to staying on in an advisory capacity to help the new owner learn the ropes?

Begin the process of finding and vetting buyers early. These could be industry competitors, investment groups or individual entrepreneurs who may be a good fit. A business broker can help you identify potential buyers and spread the word through their network.

Plan Your Exit with Tax Strategy in Mind

Taxes play a major role in what you ultimately keep from a sale, so it’s important to understand your options early.

Your exit is also a key moment for gift and estate planning. Be aware that gifts to family members above the lifetime gift and estate tax exemption ($15 million for individuals in 2026) might trigger gift taxes. With enough lead time—ideally a few years before a sale—you may be able to transfer interests to family members or trusts, use your lifetime gift and estate tax exemption more strategically or coordinate charitable strategies in a way that reduces future estate or capital gains taxes while aligning with your legacy goals.

Meanwhile, sales to employees could trigger capital gains taxes. If your business is structured as an S corp or C corp, you might consider an employee stock ownership plan (ESOP), which could defer or even eliminate capital gain taxes if structured properly.

If you are considering an external buyer and your business is structured as a C corp or S corp, you and the buyer will also need to decide whether the transaction should be a stock sale or an asset sale. A stock sale often benefits sellers because more of the gain is taxed at long-term capital gains rates and may avoid a second layer of tax inside a corporation. Buyers often prefer an asset sale because they can step up the basis of the assets they acquire and may avoid certain liabilities.

In an asset sale, the company sells individual assets—such as equipment, inventory, customer relationships and goodwill—and portions of the gain may be taxed at higher ordinary income rates (for example, depreciation recapture). How the purchase price is allocated across these asset categories can significantly affect after-tax results for both sides.

Because these decisions can be complex and difficult to change once a letter of intent is signed, involving an advisor, CPA, and attorney early can help ensure the deal structure supports your long-term financial plan and minimizes taxes.

Charting the future

For many business owners, exit planning rarely tops the to-do list. After all, there are plenty of day-to-day demands competing for attention, let alone the fact that it can be difficult for owners to think about the day they’ll no longer lead the company they built. Yet the most successful exits are those planned in advance, allowing owners to optimize value, identify an ideal buyer or successor, and prepare their employees for a smooth transition—and structure the sale in a way that makes sense after taxes.

If you’re starting to think about an exit—whether you’re ten years out or already in early conversations with a buyer—you don’t have to navigate these decisions alone. At TAGStone Capital, we help business owners pull all the pieces together: clarifying goals, coordinating with valuation experts, CPAs and attorneys, and designing a plan for turning a one-time liquidity event into durable, tax-efficient cash flow for the next phase of life.

If you’d like help with business exit planning, TAGStone Capital can help you design a tax-efficient strategy that meets your financial goals and protects your legacy.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for returns and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources we believe to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes  only  to  reflect  the  current  market  environment;  no  index  is  a directly  tradable investment.  There  may  be  instances  when  consultant  opinions  regarding any fundamental or quantitative analysis do not agree.

The  commentary  contained  herein  has  been  compiled  by  W.  Reid Culp,  III  from  sources  provided  by  TAGStone  Capital,  as well  as  commentary  provided  by  Mr.  Culp,  personally,  and  information independently  obtained  by  Mr.  Culp.  The  pronoun  “we,”  as  used  herein,  references collectively the sources noted above.

TAGStone Capital, Inc. provides this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult your advisor from TAGStone or others for investment advice regarding your own situation.