Generational Wealth Planning: A Guide for High Net Worth Families

By Trevor Scotto, CPA, CFP®

Trevor Scotto is a CPA and CFP® and co-founder of Fiduciary Financial Group, where he focuses on tax-aware strategies, early retirement planning, and legacy and estate planning for high net worth families.

This article is for educational purposes only and does not constitute individualized tax, legal, or investment advice. Tax laws are subject to change. The impact of any strategy described here depends on your specific assets, tax situation, family circumstances, and estate planning goals. Consult your own tax and legal advisors before acting on anything described here.

The generational wealth definition starts with a simple idea: it is not a specific dollar figure, but assets that are built up by one generation and transferred to the next in a way that continues to provide financial benefit. There is no official amount that qualifies as generational wealth, so questions like how much is generational wealth or what is considered generational wealth do not have a single answer. What matters is whether the assets are structured to outlast the person who built them and to support future generations' financial stability.

In practice, generational wealth may include a diversified investment portfolio, real estate holdings, an ownership stake in a business, retirement accounts, life insurance proceeds, and other appreciating assets. For many high net worth families, generational wealth is not a single asset but a collection of holdings accumulated over decades, sometimes across more than one generation already.

The size of the estate matters less than the structure behind it. A family with a modest but well-organized plan, clear beneficiary designations, and coordinated tax planning may transfer wealth more efficiently than a larger estate with no plan at all. That is part of why generational wealth planning is as much about process and coordination as it is about account balances.

How to build generational wealth is a question with no shortcut answer. Building generational wealth is generally a long-term process that depends on consistent saving, disciplined investing, and structuring assets so they can be transferred efficiently. There is no single strategy that works for every family, and the right combination depends on income, existing assets, and goals.

Long-term investing is typically the foundation. A diversified portfolio held across market cycles, rather than one built around short-term trading, seeks to compound over time and to support both current income needs and a future transfer to heirs. Tax-efficient account structures, including retirement accounts, taxable brokerage accounts, and, where appropriate, trusts, may help preserve more of that growth by managing when and how gains are taxed.

Business ownership is another common path toward how to create generational wealth. Families who build or acquire a business often see it become the largest asset in the estate, which raises separate questions about succession planning, valuation, and how ownership transfers to the next generation, whether through a sale, a gift, or a combination of the two.

Real estate, held directly or through an entity, is a third common building block, offering the potential for both income and appreciation, along with its own set of tax rules around depreciation and basis.

Tax planning is one component of building generational wealth, not the only one. A family that minimizes taxes but neglects diversification, liquidity, or spending needs during retirement has not necessarily built a stronger financial position. For high net worth families already in or approaching retirement, the question of how much can be spent without threatening the legacy intended for heirs deserves its own analysis. Our article on retirement spending for high net worth households covers that trade-off in more depth. Building generational wealth, in other words, works best as one thread within a broader financial plan that also addresses income needs, risk tolerance, and family goals.

Generational wealth transfer strategies generally fall into a few categories: gifting during life, transfers at death, and structures such as trusts that sit between the two. Each comes with its own tax treatment, and the right combination depends on the size of the estate, the types of assets involved, and family goals.

The annual gift tax exclusion allows an individual to give up to a set amount per recipient each year without using any of their lifetime exemption or triggering a gift tax return requirement. For 2026, the annual exclusion is $19,000 per recipient, unchanged from 2025 (IRS, 2026 Tax Inflation Adjustments, as of October 2025). A married couple can combine exclusions to give $38,000 per recipient per year. Gifts below this threshold do not count against the lifetime exemption, which makes consistent annual gifting a straightforward way to move value out of a taxable estate over time.

The lifetime estate and gift tax exemption is the larger lever. For 2026, the exemption is $15 million per individual, or $30 million for a married couple using portability, up from $13.99 million per individual ($27.98 million per married couple) in 2025 (IRS, 2026 Tax Inflation Adjustments, as of October 2025). The One, Big, Beautiful Bill Act made this higher exemption permanent and indexed it for inflation going forward, which removed the reduction back toward pre-2017 levels that had previously been scheduled to take effect after 2025. Because federal law can change again in the future, families with estates near or above the exemption may still want to review gifting strategies while the current exemption is in place.

Assets held until death generally receive a step-up in cost basis to fair market value, which may reduce or eliminate the capital gain an heir would otherwise recognize on a later sale (IRS Publication 550, Investment Income and Expenses). This is a meaningful consideration for families holding highly appreciated assets, including concentrated stock positions. Our guide to capital gains tax on RSUs and stock options covers how basis and holding period interact for equity compensation specifically. Assets given away during life, by contrast, generally carry over the original owner's basis, so the choice between gifting now and holding until death often turns on comparing estate tax exposure against capital gains exposure.

Trusts, both revocable and irrevocable, are common tools for transferring wealth with more structure than an outright gift. A revocable trust primarily helps manage and organize assets and can simplify the transfer process, though it generally does not remove assets from the taxable estate. An irrevocable trust may remove assets from the taxable estate and could help reduce future estate tax exposure, but doing so generally means giving up control over those assets, so the trade-off deserves careful consideration alongside a family's broader plan.

Direct payments for tuition or medical care are a separate exception worth knowing. Payments made directly to an educational institution or medical provider on someone else's behalf are not subject to gift tax, regardless of the amount, and do not count against the annual exclusion or lifetime exemption. This can be a useful option for parents or grandparents who want to support education or healthcare costs without using other gifting capacity.

None of these strategies operate in isolation, and the tax result of one decision can affect another. Families managing concentrated stock positions alongside a broader transfer plan may also want to review our overview of tax-loss harvesting for concentrated positions and our retirement income and tax planning guide, both of which touch on decisions that interact with wealth transfer planning.

The federal estate tax applies to the value of an estate that exceeds the lifetime exemption described above. For 2026, that means estates above $15 million per individual, or $30 million for a married couple using portability, may owe federal estate tax on the excess. The top federal estate tax rate is 40% on amounts above the exemption (IRS, Estate Tax, as of 2026). Because the exemption is now indexed for inflation and was made permanent under current law, fewer estates are subject to federal estate tax than under prior rules, though that could change with future legislation.

State estate or inheritance taxes are a separate consideration and may apply even when an estate falls below the federal exemption. A number of states impose their own estate or inheritance tax with a lower exemption threshold than the federal amount, so a family's state of residence, and in some cases the location of real estate holdings, can meaningfully change the overall tax picture.

Estate tax planning should not be done in isolation from investment and income tax planning. Decisions such as when to realize capital gains, how to sequence retirement account withdrawals, and how to structure charitable giving can all affect the size of the taxable estate and the income tax picture for both the current generation and their heirs. A plan that addresses estate tax exposure without considering these interactions may create unintended tax consequences elsewhere, which is why estate tax considerations are best reviewed as one piece of a coordinated financial plan rather than a standalone project.

Families pursuing generational wealth planning tend to run into a similar set of avoidable mistakes.

• Focusing solely on minimizing taxes, at the expense of broader goals such as liquidity, retirement income, or the flexibility to respond to a family emergency.
• Failing to update wills, trusts, and powers of attorney after a major life event, such as a marriage, divorce, birth, death, or business sale.
• Working with an investment advisor, a CPA, and an estate attorney who do not communicate with each other, which can leave gaps between the tax plan, the investment plan, and the legal documents.
• Avoiding conversations with heirs about the plan, which can leave the next generation unprepared to manage what they receive or to understand the intent behind it.
• Overlooking beneficiary designations on retirement accounts and life insurance policies, which generally pass outside of a will and can override even a carefully drafted estate plan if left outdated.

Any one of these gaps can undermine an otherwise well-designed plan. Coordinating the people involved, and revisiting the plan on a regular schedule, is often what separates a plan that works from one that looks good on paper but fails in practice.

Generational wealth planning touches investment management, tax planning, and estate planning at the same time, which is why coordination between those disciplines matters as much as the individual strategies themselves. A fee-only, fiduciary advisor is compensated only by client fees, with no commissions or product sales, so recommendations are not influenced by which trust, insurance product, or investment is used to help implement a plan. For successful retirees and high net worth families in particular, this kind of coordination often makes the difference between a plan that works on paper and one that holds up in practice.

A CPA-integrated approach adds another layer of coordination. When the professional managing a family's investments and the professional preparing their tax return work from the same plan, decisions such as when to realize a gain, how to structure a gift, or when to fund a trust can be evaluated together rather than in separate silos. That kind of coordination may help families avoid several of the common mistakes described above, including gaps between advisors and outdated documents that no longer reflect current tax law.

Fiduciary Financial Group specializes in working with successful retirees and high net worth families who want their tax, estate, and investment planning coordinated under one roof. Our fee-only, fiduciary, CPA-integrated model is built around this kind of coordination, and our legacy and estate planning services work alongside our tax and investment teams so a family's transfer strategy is developed with the full financial picture in view. For high net worth families exploring generational wealth advisors, this specialization and integration, rather than a single strategy or product, is generally the differentiator worth evaluating.

What is generational wealth?

Generational wealth is a term for financial assets, such as investments, real estate, retirement accounts, and business interests, that are passed from one generation to the next and continue to provide financial benefit over time. It is not a fixed dollar amount, and there is no official generational wealth definition in the tax code. What matters is whether assets are structured so they can transfer efficiently and continue supporting a family's financial security.

How much money is considered generational wealth?

There is no set dollar figure that defines generational wealth, so how much is generational wealth depends on the family and the context. What is considered generational wealth in one family's circumstances may look different in another's. The more relevant question is usually whether the assets are structured to outlast the person who built them and to be transferred efficiently to the next generation.

What is the annual gift tax exclusion for 2025 and 2026?

The annual gift tax exclusion is $19,000 per recipient for both 2025 and 2026, meaning an individual can give up to that amount to any number of people each year without using any of their lifetime exemption (IRS, 2026 Tax Inflation Adjustments, as of October 2025). A married couple can combine exclusions to give $38,000 per recipient per year.

How does a stepped-up basis work?

Assets held until the owner's death generally receive a step-up in cost basis to their fair market value at that time, which may reduce or eliminate the capital gain an heir would owe if they later sell the asset (IRS Publication 550). Assets given away during the owner's life do not receive this step-up. The recipient generally carries over the original owner's basis instead, which can affect the capital gains tax due on a future sale.

What is the federal estate tax exemption for 2025 and 2026?

For 2025, the federal estate and gift tax exemption was $13.99 million per individual, or $27.98 million for a married couple. For 2026, the exemption increased to $15 million per individual, or $30 million for a married couple using portability, and was made permanent under current law (IRS, 2026 Tax Inflation Adjustments, as of October 2025). Amounts above the exemption are generally taxed at a top federal rate of 40% (IRS, Estate Tax).

How can a CPA-integrated advisor help with generational wealth planning?

A CPA-integrated advisor coordinates tax planning and investment management under one roof, so decisions about gifting, trusts, and asset transfers are evaluated alongside a family's tax situation rather than in isolation. This coordination may help families avoid common mistakes such as outdated estate documents or gaps between separate advisors. Our firm specializes in working with successful retirees and high net worth families on exactly this kind of coordination, combining fee-only, fiduciary investment management with CPA-level tax expertise so both sides of the planning process are addressed together.

• IRS, Estate Tax
• IRS, Gifts & Inheritances FAQ
• IRS Publication 550, Investment Income and Expenses
• IRS, 2026 Tax Inflation Adjustments (Annual Gift Tax Exclusion and Estate Tax Exemption)

We specialize in working with successful retirees and high net worth families on decisions like these. If you are exploring generational wealth planning for your family, we invite you to review our legacy and estate planning services and our approach for high net worth families. We also encourage you to schedule a conversation with our team.