It’s referred to as ‘shirtsleeves to shirtsleeves.’ As David Krauss, director of Commerce Trust Company’s Family Office division, explains, studies have shown that about two-thirds of high-net-worth families lose their wealth by the third generation. “The first generation earns it, the second spends it, and by the third, they may see it all go away,” he says. “The biggest challenge is to overcome this tendency to deplete the family assets over that time.”

David Ott, a founding partner of Acropolis Investment Management, attributes that tendency to three factors: time, dilution and non-contribution. While the first generation built the wealth, over time, the money is spread out among subsequent family members. Add in possible divorces or other relatives, and the family fortune becomes diluted, especially if the next generations are not helping to sustain it. “It’s hard to replicate the success that a matriarch or patriarch achieved,” Ott says. “You may live a million-dollar lifestyle, but if you haven’t contributed to the family business, it’s not going to last very long.”

Enter family governance. “With shared assets— whether it’s a closely-held business or a house on Hilton Head—there’s the question of how they will be used? Who gets to use them? Who manages them? Families need to make sure their decision-making has sense and purpose behind it,” Krauss notes.

A family must first establish goals for its wealth. “The solution isn’t just recognizing and understanding their money, but also recognizing and understanding the values behind the family, so they are not just spending the money, but using it to achieve what they want to accomplish,” Krauss explains.

When creating a mission statement for their wealth, families must make sure everyone is on the same page, Ott explains. “Talk about how the money was earned and the importance of preserving it.”

And that education should begin early, so that the later generations understand the money didn’t just appear in their bank accounts, says Delo Advisors owner Sherry Delo. “Parents need to teach their children about the responsibility of sustaining the family wealth, as well as what they did right and wrong in their own efforts.”

Whether the wealth is invested as a whole, or distributed to individual family members, if everyone buys into a shared vision, it will help avoid potential conflicts that can arise over money. At the same time, families should bring in outside experts like estate attorneys, legal advisors, accountants and financial advisors to establish a plan to achieve that shared vision—from investments to charitable contributions— and determine roles for each family member, Delo says. “Families should set objectives for what they want to accomplish with the money and who will take responsibility for each facet of it.”

While money can open many doors, it also can present many challenges. The sooner conversations are had about how to prudently and effectively manage wealth, the more likely a family will sustain it through many generations, Krauss says. “The families who look at the future from the very beginning will have a much better chance at success.”