The Biggest Mistake Wealthy Families Make
Most wealthy families spend years building an airtight plan for their money. They hire attorneys and accountants, set up trusts, and make sure every dollar transfers efficiently when they're gone. But there's a question almost nobody asks: are the people receiving that wealth actually ready to manage it?
That gap, according to Matt Tullis, founder of Regents Legacy, is the single biggest mistake families make when it comes to passing down wealth. Tullis has spent four decades working with individuals and families on wealth, investing, and finances, and he says he's watched the same story play out again and again. With an estimated $104 trillion expected to pass between generations by 2045, it's a mistake more families are about to make at the same time.
A parent spends thirty or forty years building a business, investing, taking risks, making mistakes, and learning how money actually works. Along the way, they develop judgment. They learn how to spot an opportunity, how to recover when something goes wrong, when to take a risk, and when to walk away. Then one day, all of that wealth passes to the next generation, but none of the experience that created it comes along with it.
Why wealth disappears so fast
There's an old saying: shirt sleeves to shirt sleeves in three generations. One generation builds the wealth, the next holds onto it, and the third loses it. Tullis says that pattern is moving faster than ever, and in some families it now happens in a single generation.
It isn't really about the money. Roughly seven out of ten wealthy families have no real plan for handing down more than assets, and most family wealth is gone by the third generation without one. Tullis is quick to point out that the fortune itself isn't the problem. It's the absence of a system for handing down the thinking behind it.
If the only thing passed along is assets, families are hoping the next generation will somehow develop, on their own, the judgment, discipline, and financial know-how that took a lifetime to build. Hope isn't a strategy, and it certainly isn't an inheritance plan. An attorney can draft the perfect trust and a financial advisor can build the perfect portfolio, and the wealth can still be gone within a generation if nobody ever taught the family how to hold onto it.
What families who get this right do differently
Families who avoid this outcome don't just write a plan. They build a system around it. They put governance in place. They talk about money openly, long before a crisis forces the conversation. And they give the next generation real chances to make financial decisions, and real mistakes, while the people who already learned those lessons are still around to help.
That's the thinking behind what Tullis calls a legacy bank: a family financial structure where capital can be loaned out, invested, repaid, and put back to work inside the family. The money matters, but the real value is what moves alongside it. Habits, values, accountability, and financial judgment get passed down right along with the capital. Instead of receiving a pile of money and figuring it out alone, the next generation learns how to actually be stewards of what they've been given.
Not a trust, not a will
It helps to understand what a legacy bank is not. A will or a trust is built to do one thing well: distribute assets after someone dies. It's a one-time event, and once it's signed, the attorney relationship largely ends there. A legacy bank works differently. It's a lasting structure that governs how money is used while the family is still together, not just after someone is gone.
That means built-in family education, ongoing conversations, and a relationship with an advisor that continues for decades instead of ending at signing. The estate documents still matter. They're just one piece of a much bigger picture, one that includes teaching heirs how to actually use what they're set to receive.
One conversation you can have this month
Tullis suggests a simple starting point for any family ready to close this gap: schedule a conversation about wealth, but don't lead with numbers. Skip the conversation about exactly how much everyone stands to inherit. Instead, ask a different question. What do we want our family's wealth to make possible over the next 50 or 100 years? Education? Starting a business? Buying a first home? Giving back to a cause the family cares about?
That single shift, from who gets the money to what the money is for, changes the whole conversation. It moves the focus away from a payout and toward a purpose, which is a very different way to think about a legacy.
Passing down more than the money
Tullis explores this idea in much greater depth in his book, "The Legacy Bank: A Beginner's Guide to Building a Financial Dynasty." But the core message is simple enough to act on right away. The goal isn't just to transfer wealth. It's to transfer the ability to manage it, grow it, and use it well.
That's the work Regents Legacy does with families every day: building the governance, education, and structure that a traditional estate plan leaves out, so wealth doesn't just pass down. It sticks around, and it grows, because the people holding it know how to carry it forward.
Building it usually comes down to three stages. First, mapping out a family's goals, structure, and readiness. Second, working with licensed legal and tax professionals to actually set up the bank, the entities, the governance, and the lending framework behind it. Third, and this is the part most families never get from an attorney, is staying on as a long-term partner so the plan and the family stay aligned as circumstances change over the years.
If you're wondering whether your own family has a real plan for the money, or just a plan for the paperwork, that's exactly the conversation Regents Legacy is built to help you start. A short, no-pressure call is often all it takes to see where the gaps are and what a legacy bank could look like for your family.