PUTTING AN END TO THE SHIRTSLEEVES-TO-SHIRTSLEEVES PHENOMENON: A NEW WEALTH MANAGEMENT PARADIGM

By Maryann S. Meggelin, Esq.^{* 1}

I.

Today, wealthy families surround themselves with teams of sophisticated financial advisors who, in their efforts to help these families hold onto their wealth, wield an array of legal and financial tools unheard of back in the days when the millionaire was truly the exceptional American. But if we who use these tools wish to consider ourselves successful, we must account for the shirtsleeves-to-shirtsleeves phenomenon, which shows us that nearly three of every four wealthy families see their wealth dissipate by the end of the second generation and nine in ten see it disappear altogether before the end of the third generation.² How would our clients respond if they knew that their families would likely suffer this fate?

Too many of our clients do not plan far enough into the future to give their wealth a good shot at having a lasting impact. They seek mainly to transfer wealth to their children, with enough left over to get the grandchildren through college. They look 30 years into the future at most, without understanding that in all likelihood the planning they do will have stopped bearing fruit soon thereafter.