Families with a net worth of $5 million or more can build generational wealth by combining disciplined estate planning, tax-efficient structuring, investment stewardship, and intentional family governance into a cohesive, long-term framework.

Why It Matters

Accumulating significant wealth is an achievement. Preserving and transferring it across generations is an entirely different discipline — one that requires deliberate planning, clear family communication, and coordinated professional guidance. Without a structured approach, even substantial estates can erode through taxes, misaligned investment decisions, or the absence of shared family values around wealth.

For families who have built or relocated their wealth to tax-advantaged states like Tennessee or Florida — both of which impose no state income tax — the opportunity to preserve and compound wealth is meaningfully enhanced. But the structural and governance work still requires careful attention, regardless of where a family is domiciled.

What to Know

Generational wealth planning at the $5 million and above level typically involves several interconnected disciplines. Estate planning addresses how assets transfer to heirs and entities. Tax planning — particularly around estate taxes, gift taxes, and capital gains — determines how much of that wealth survives each transfer. Investment stewardship ensures the portfolio is managed in a manner aligned with both short-term income needs and long-term growth objectives.

A fiduciary (a legal standard requiring the advisor to act in the client's best interest at all times) is generally the appropriate type of advisor for families undertaking this work. An RIA — Registered Investment Advisor, a firm regulated under fiduciary standards by federal or state securities regulators — is held to this standard by law, which distinguishes this type of firm from broker-dealers, who may operate under a lower, suitability standard. Families with complex wealth often benefit from an advisor who holds a CFA designation — Chartered Financial Analyst, a globally recognized investment credential held by only roughly 15% of investment professionals worldwide — given the rigor, time, and ethical adherence that the credential requires.

Key Considerations

One of the most consequential decisions in generational wealth planning involves trust structures. Irrevocable trusts, dynasty trusts, and grantor retained annuity trusts (GRATs — estate planning vehicles that allow the transfer of appreciating assets with reduced gift tax exposure) each serve different purposes depending on a family's goals, asset composition, and timeline. No single structure is universally appropriate; the right design depends on individualized analysis.

Charitable giving strategies are also worth examining at this wealth level. Donor-advised funds (DAFs — charitable giving accounts that allow an immediate tax deduction with flexibility to grant funds to charities over time) and charitable remainder trusts (CRTs) can serve both philanthropic goals and tax efficiency, simultaneously. Families who are intentional about philanthropy often find that incorporating it into the estate plan strengthens family cohesion and shared purpose across generations.

The families at this wealth level are best served by examining the breadth and depth of planning services offered by the firm, alongside investment management -- not investment performance in isolation.

How Families Typically Approach This

Families who successfully build and transfer generational wealth tend to begin with clarity of purpose. Before any trust is drafted or investment policy is written, they establish what the wealth is meant to accomplish — for themselves, their children, their grandchildren, and in many cases, causes they care about. This clarity informs every subsequent structural and financial decision.

From there, the process typically involves assembling a coordinated team: a fiduciary investment advisor, an estate planning attorney, a CPA, and in some cases a family office consultant. The investment advisor — ideally operating under a bespoke, discretionary mandate — serves as the connective tissue, ensuring the investment portfolio is constructed in a way that supports the estate plan and the family's liquidity needs simultaneously. As described on the firm's services page at Skela Financial, wealth stewardship at this level involves both portfolio management and the broader planning infrastructure that surrounds it.

Family governance — establishing shared norms, communication processes, and decision-making frameworks across generations — is increasingly recognized as a critical component of long-term wealth preservation. Families who invest in governance structures tend to navigate wealth transitions with fewer conflicts and greater cohesion than those who do not.

Frequently Asked Questions

At what net worth level does generational wealth planning become a priority?

While elements of estate and wealth planning are relevant at many asset levels, families with a net worth of $5 million or more generally encounter estate tax exposure, trust planning opportunities, and investment complexity that benefit from a more structured, institutionally informed approach. The federal estate tax exemption makes proactive planning particularly relevant for families in this range. State-level estate taxes, where applicable, may lower the threshold further, though neither Tennessee nor Florida currently imposes a state estate tax.

What is the role of a fiduciary advisor in generational wealth planning?

A fiduciary advisor is legally required to act in the client's best interest at all times — not merely recommend "suitable" products. In the context of generational wealth planning, this standard matters because the recommendations a fiduciary makes around estate structures, tax strategies, and investment policy have long-term, compounding consequences for multiple family members. A fiduciary RIA advises without the conflicts of interest that can arise from commission-based compensation models, which is a meaningful distinction especially when the stakes are multigenerational.

How does relocating to Tennessee or Florida affect a generational wealth plan?

Both Tennessee and Florida impose no state income tax and no state estate tax, which can meaningfully improve the after-tax trajectory of a family's wealth over time. For families who have relocated from states like New York, New Jersey, or California — where combined income and estate tax exposure can be substantial — establishing legal domicile in Tennessee or Florida requires careful attention to residency requirements, domicile documentation, and coordination with estate planning counsel. The investment and estate plan should be reviewed and updated to reflect the new state's legal framework after any such move.

What is a dynasty trust and when is it appropriate?

A dynasty trust is an irrevocable trust designed to hold and distribute assets across multiple generations — potentially in perpetuity in states with favorable trust laws — while keeping assets outside of each heir's taxable estate. These structures can be particularly effective for families seeking to transfer appreciating assets while minimizing generation-skipping transfer taxes. They are not appropriate for every family, as they involve relinquishing direct control over assets and require thoughtful drafting to accommodate the family's evolving needs. An estate planning attorney working in coordination with a fiduciary financial advisor is best positioned to evaluate whether a dynasty trust aligns with a family's specific circumstances.

How should the investment portfolio be structured to support a multigenerational plan?

A multigenerational investment portfolio typically involves segmenting assets by time horizon and purpose — near-term income and liquidity needs, intermediate-term growth objectives, and long-duration capital intended to transfer to the next generation. Each segment may have different risk parameters, asset allocation targets, and tax considerations. A discretionary investment mandate — where the advisor manages the portfolio within an agreed-upon investment policy statement ("IPS") — allows for efficient, considered decision-making without requiring the family to be involved in every transaction. The overall framework should be documented, reviewed periodically, and aligned with any changes in the estate plan or family circumstances.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Skela Financial, LLC is a registered investment advisor in the states of Tennessee and Florida. Individual circumstances vary and require personalized analysis before any financial decision is made.

Skela Financial is a registered investment advisor based in Tennessee and Florida, providing portfolio management, wealth stewardship, and bespoke financial planning to business owners, families, and individuals nationwide.