5 Ways to Build and Preserve Generational Wealth as an Entrepreneur

December 8, 2021
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If you’re a business owner or entrepreneur who wants to start being intentional with your time and money, now is the time to start thinking about generational wealth. Sure, building wealth for future generations can feel like an overwhelming task, but the good news is that you’re in complete control and can choose a process that works best for you and your money. 

At the end of it all, you get to create something larger than yourself that leaves a legacy behind for future generations and provides financial comfort for them whether that be in your lifetime or beyond. Want in but aren’t sure how to get started? Here are 5 steps you can take to begin building and preserving family wealth.

1. Know and Love Your Money

This one might sound obvious but it bears repeating: you actually need to look at and know your money. Don’t be a stranger when it comes to your expenses and debt. Trust me, I get how easy it can be to turn away from your debt like an ostrich with your head in the sand, but if you want to build wealth, you need to get honest about what liabilities you have. So, come up with a plan. Remember, just because you’re paying off debt doesn’t mean you have to pay it off all at once!

Another way you can love your money is by being intentional with it. Ever feel like you have money coming in and then all of a sudden, poof!—it’s gone! If you don’t keep track of your spending, don’t have a budget or money tracking system, it will seep out like a leaky faucet. How can you possibly build wealth without paying attention to where your money is being spent? 

Get away from the leaky faucet problem by creating a money tracking system on your own or buying a solution from a finance expert. Bonus: Using the term money tracking allows me to feel more intentional, abundant, and in control as opposed to the term budget that often has a negative connotation.

Lastly, what to do with leftovers? This is the kind of problem we like to have! Once you’ve had the chance to evaluate what liabilities you have and track your money (and decide where you’re no longer spending money), you’ll have a clear visual of what’s leftover to invest. Investing your money is going to help you make money. And who doesn’t love that?!

2. Invest in Life Insurance

Death. The topic we rarely talk about and makes us squeamish at best and terrified at worst. One day death will be knocking at our door and while we can’t avoid it, we can prepare for it. If I had to advocate for just one thing, it would be life insurance (depending on the type of course!). Whether you choose term, whole, or universal life insurance, believe it or not, it can also be an investment/savings account. This can also be extremely beneficial during times when an emergency or unexpected expense comes up.

3. Create an Estate Plan

That’s right, if you’re alive, breathing, and over 18, you need an estate plan. An estate plan is a collection of legal documents that provide clear direction on how your assets should be allocated (and who should do the allocating) in case of incapacitation or death. Contrary to popular misconception, estate planning is NOT just for the rich and famous like the families of Bridgerton, so do your ancestors a favor and protect your stuff!

As with anything in life, there are objections around estate planning. As an estate planning attorney, I often hear, “I’m too young,” “I don’t have enough to protect,” or “My family knows what I want.” I’m here to say that no one is guaranteed tomorrow and if you can’t face your mortality for yourself, do it for your loved ones. If your family and loved ones know what you want, make sure you have the right documents in place otherwise it’s not legally binding! 

“Estate” might sound like a big word that doesn’t represent your assets, but it includes everything—your home, bank accounts, and sentimental things. Even if you haven’t reached the financial goals you have for yourself,  you can be rest assured knowing they’re protected as you continue working towards them. Remember, estate planning is not just for you; it’s a selfless act for your loved ones. An estate plan is a surefire way to pass on all your hard-earned wealth to your kids, their kids, and their kids’ kids. You get the idea!

Even better, with a proper estate plan, your family can stay out of probate court, will have immediate access to your assets, and won’t have to wait on the state to continue paying your bills, paying for a funeral or cremation, or paying for who will take care of your babies or your business. Estate plans even help reduce any potential conflict between loved ones. If you spell out your wishes when you have full capacity, it’s tough to argue against it after you’re gone. Meaning: Even when you’re not physically here, you’re still in control!

4. Establish a Business Succession Plan

While considering how to build wealth, it’s important to keep in mind how you can protect and pass on that wealth. So once you have your estate plan set up, the next step is business succession planning. 

Passing on your business to your family allows them to continually benefit from it. However, without an explicit distribution to your estate in your bylaws or operating agreement, there may be some issues if your family wants to stake claim to your business. So get an overview of how your business is set up to see where it could potentially be open to liability. Keep in mind that if you’re a sole proprietor, you have less protection than an LLC or corporation. If you’re in a partnership or there are multiple owners, an agreement as to who owns what part of the business is essential. 

Provide clear instructions as to how you want the business to continue running or if you want it sold if you were to become incapacitated or pass away. Either way, you want to make sure that the business you’ve built continues to benefit your family one way or another.

5. Protect Your IP

Intellectual property is vital when it comes to running your business, so don’t forget about it! If it’s not protected, don’t build a brand. I’m sure you’ve heard of someone who built an amazing program or picked a super catchy brand name, only to find out someone else already owns it, and now their attorney is threatening to sue them if they don’t stop. With proper planning and research, that won’t and doesn’t have to be you. 

Consider trademarking when looking at the best way to protect the brand you’ve worked so hard to develop. For example, if you want to avoid having to ever change your business or program name, you can do so by trademarking your business or program name with the USPTO so it’s registered throughout the U.S. For those interested in going big and global, you can also trademark your name internationally!

Paving the way for generational wealth has to start somewhere, and it can begin with you. Securing your business assets sooner rather than later is one of the best executive choices you can make. So take control today and start being intentional with your time and money so YOU can live a life without regrets.

Image: Courtesy of Carmen Rosas

About the author: Hoop-wearing, award-winning, and stereotype-defying attorney Carmen Rosas is on a mission to help women chase and secure the bag. Drawing on more than 10 years of experience in estate planning as the founder and lead counsel of Carmen Rosas Law, Carmen equips women to protect themselves and their families by protecting their assets. Her work has also been featured in The Huffington Post, Forbes, The Penny Hoarder, Mamiverse, Modern Latina, and Blogs By Latinas where she shares her guidance and legal advice with women around the country.

Featured image: Smith House Photo

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