When wealth passes from one generation to the next, it carries with it more than just assets. For families of significant means, we often see the third generation wrestling with emotions that are far more complex than gratitude alone. In fact, an inheritance for them can feel less like a windfall and more like a burden. As financial planners, we have walked this journey with families where the first generation worked tirelessly to build wealth, the second preserved it with discipline, and the third found themselves navigating an intricate mix of privilege, pressure, and purpose. How this generation responds will ultimately determine whether the legacy entrusted to them will endure.
The weight of expectation
In our work, we have often witnessed heirs paralysed by the responsibility of living up to expectations. They are acutely aware of the sacrifices, risks, and relentless work ethic of the founders of the family fortune. They also see the custodianship of the second generation, who safeguarded and grew the capital. By the time the baton is passed to them, failure is not an option. However, for some, this pressure can lead to choices in career or lifestyles that are less aligned with personal aspirations and more about validating the efforts of previous generations. The fear of squandering what has been so carefully built can sometimes be overwhelming and debilitating.
The embarrassment of privilege
We have sat with third-generation clients who – understandably so – feel uncomfortable being labelled ‘trust-fund babies.’ This is because in societies where independence and self-made success are prized, inherited wealth can cast a long shadow. Some heirs struggle with credibility, questioning whether their accomplishments are truly their own – while others go to great lengths to downplay their privilege, avoiding conversations about their inheritance or working twice as hard to prove that they are more than the wealth attached to their name.
The desire for independence
Despite the financial safety net that inheritance provides, many heirs are determined to carve out success on their own terms, often emphasising that their careers, businesses, or philanthropic pursuits should stand independently of the family legacy. For these individuals, inherited wealth is not a script to be followed but a platform from which to launch their own purpose and identity. Yet, we have also seen how the comfort of wealth can dilute ambition, tempering the urgency to strive and achieve. In our experience, it is not the size of the inheritance that shapes the outcome, but rather the mindset with which it is approached and the manner in which it is managed.
The fear of dependency
A recurring theme in our planning conversations is the unspoken fear of dependency, as heirs recognise that while wealth can provide immense freedom, it can just as easily foster complacency. Many express concerns about relying too heavily on trust distributions or sliding into lifestyles sustained exclusively by inherited capital, and it is for this reason that we encourage them to focus on developing their own income streams, building meaningful skill sets, and maintaining disciplined financial habits. We believe that inheritance should serve to supplement their lives rather than become the foundation upon which their entire identity rests – because without this level of intentionality, dependency has the potential to erode not only financial stability but also self-confidence and personal growth.
Approaching wealth with stewardship
History provides numerous lessons of fortunes that have unravelled by the third generation, as inflation, imprudent investment choices, unchecked spending, and family conflict slowly erode even the most substantial estates. In our conversations with clients, we are careful to emphasise that wealth is never indestructible and that its preservation depends entirely on the quality of stewardship exercised by each successive generation. The third generation, in particular, should not see themselves as passive beneficiaries of past success, but rather as caretakers of a legacy that must be nurtured with foresight and discipline for the benefit of those who will follow. True stewardship requires an appreciation of the sacrifices made in the past, the wisdom to plan intelligently for the future, and the recognition that wealth is a tool to create opportunity, not a guarantee of fulfilment or happiness.
Practical considerations for heirs
In guiding families to equip heirs with practical tools for navigating inheritance responsibly, our advice is as follows:
- Seek professional advice: Managing multi-generational wealth involves tax, estate, and investment complexities, and an experienced advisor can provide objectivity and expertise.
- Invest in financial literacy: Heirs who understand risk, inflation, and investment fundamentals make better decisions and avoid outsourcing responsibility entirely.
- Guard against lifestyle inflation: Spending beyond sustainable boundaries is one of the fastest ways to dissipate wealth.
- Pursue personal purpose: Inheritance is best seen as a safety net, not a life plan. Careers, ventures, and personal achievements provide identity and independence.
- Align wealth with values: Using wealth for philanthropy, education, or purposeful investment reflects the family’s ethos while instilling meaning.
- Plan for continuity: Each generation must think about the legacy they will leave. Structuring estates thoughtfully ensures the family story does not lose its direction.
We have found that the healthiest approach for third-generation heirs is one that balances gratitude with independence. Gratitude honours the sacrifices of those who came before, while independence ensures they are not defined solely by their inheritance. This balance can create the freedom to acknowledge privilege without being imprisoned by it, and to transform wealth into a platform for meaning and purpose.
For those in the third generation, the dilemma of privilege, pressure, and purpose is undeniably real, but we believe the most meaningful shift occurs when wealth is reframed not as entitlement but as opportunity. We have seen how, with wisdom and stewardship, inherited capital can be harnessed to fund education, support entrepreneurial and philanthropic ventures, and contribute to society in ways that ensure wealth becomes a force for good rather than a burden to bear.
Have a super day!
Sue
