They say that a family ’ s wealth only lasts three generations :

• Grandparents work hard at creating wealth , likely through family businesses , savings and reinvestments of profits .

• Their children , having observed the sacrifices of their parents , build upon the wealth . While they reap some of the benefit of established businesses , they are inspired to preserve the wealth and pass it along to their children , just as their parents did to them .

• The grandchildren , however , are often far removed ( in distance , time and relationship ) from the influence of the wealth originators . For many families , this eventually leads to a sense of entitlement , a drift in objectives and an ultimate loss of wealth .

But with proper safeguards in place , specific education and formalized expectations of relatives , families can work to protect their wealth , prepare themselves for the demands and responsibilities of generational wealth and preserve a family business for multiple future generations .

Consider these five ways to preserve generational wealth and protect your family business for years to come .

1 ) FOSTER A SENSE OF LEGACY , COMMUNITY AND PHILANTHROPY . Build a curriculum around the legacy of how the family ’ s wealth came into being , including impacts beyond the immediate family . Connect family members with the employees and surrounding communities that have aided in the family ’ s wealth creation and emphasize the importance of giving back .

2 ) PRIORITIZE CONTINUING FINANCIAL EDUCATION . Proper education can prepare family members to preserve wealth and assume roles of fiscal responsibility . Emphasize lifetime learning by holding family meetings in which subjects such as financial literacy , money management , strategic planning and family social impact are taught .

3 ) SET EMPLOYMENT EXPECTATIONS . Have formalized requirements for those family members seeking employment with the family business . Consider requiring family members to have at least a year of outside employment ( allowing them to gain experience from working with others and to learn new skills ) before being eligible for any position within the family business .

4 ) ADDRESS WEALTH PROTECTION . It can be an uncomfortable conversation to have , but choices have consequences . Address any threats to the family ’ s wealth before they arise . Consider creating a formal covenant that requires children to have prenuptial agreements , which ensures the family business ownership always remains within the family .

5 ) ESTABLISH A FAMILY CODE OF CONDUCT . Setting clear expectations about behavior and communication can help guide family conduct in ways that protect the business , especially in instances of disagreement . All family members should formally agree to respect each other , promote confidentiality , adhere to ethical and lawful behavior and communicate honestly .

When such thoughtfulness is put into a formal family business preservation plan , and when family members accept responsibilities and commitments , wealth can benefit a family much longer than three generations .

Greg Sellers is a Member in the Tax Division and a leader of the Estate and Trust Service Area . Greg has over 37 years of experience in public accounting , specializing in estate , gift and trust tax planning and compliance . Greg frequently presents on topics such as estate planning , charitable gift planning , use of trusts in wealth transfer planning , and collaboration among professional advisors .