Tremendous amount of wealth will pass from Baby Boomers to younger generations in the next few decades. In fact, it’s said to be the largest transfer of intergenerational wealth in history. Because no one knows exactly how long aging Boomers will live or how much money they’ll spend before they pass on, it’s impossible to accurately predict just how much wealth will be transferred. However, studies suggest it’s somewhere between $30 and $90 trillion.
A blessing or a curse?
While most are talking about the many benefits the wealth transfer might have for younger generations and the economy, fewer are talking about the potential negative ramifications. Yet there’s plenty of evidence suggesting that many people, especially younger generations, are woefully unprepared to handle such an inheritance.
Regardless of whether you’ll be the one passing on wealth or inheriting it, you must have a well-prepared estate plan in place to prevent the potentially disastrous losses and other negative outcomes such transfers can lead to. Without proper planning, the money and other assets that get passed on can easily become more of a curse than a blessing for you and your loved ones.
Proactive planning is the key
There are a number of proactive measures you can take to help reduce the risks posed by the coming wealth transfer. Beyond putting in place a comprehensive estate plan that’s regularly updated, openly discussing your values and legacy with your loved ones can be a key way to ensure your estate planning strategies work exactly as you intend. Here’s what we suggest:
01 – Create your own estate plan
If you haven’t created your own estate plan yet—and far too many of you haven’t—it’s essential that you put a plan in place as soon as possible. It doesn’t matter how young you are, how much wealth you have, or if you have any children yet—all adults over age 18 should have some basic estate planning vehicles in place.
Be sure to regularly update your plan on an annual basis and immediately after major life events like marriage, births, deaths, inheritances, and divorce. Unlike traditional estate planning professionals, when you work with us, we maintain a relationship with you long after your initial estate planning documents are signed.
02 – Talk about wealth with your family early and often
Clearly communicate with your children, grandchildren, and other heirs what wealth means to you and how you’d like them to use the assets they inherit. Make such discussions a regular event, so you can address different aspects of wealth with your family as the younger generations grow and mature.
When you do have the conversation with your loved ones, focus the discussion on the values you want to instill, rather than what and how much they can expect to inherit. Let them know what values are most important to you, and try to mirror those values in your family life as much as possible. Whether it’s saving money, charitable giving, or community service, having your loved ones see you live your most important values is often the best way to ensure they carry those values on once you’re no longer around.
03 – Discuss your wealth’s purpose
You should also discuss the specific purpose you want your wealth to serve in your loved ones’ lives. You worked hard to build your family wealth, so you’ve more than earned the right to stipulate how it gets used and managed when you’re gone. While you can add specific terms and conditions for your wealth’s future use in estate planning vehicles like trusts, don’t make your loved ones wait until you’re dead to learn how you want their inheritance used.
If you want your wealth to be used to fund your children’s college education, provide the down payment on their first home, or invest for their retirement, tell them so. By discussing how you would like to see their inheritance used while you’re still around, you can make certain your loved ones know why you made the estate planning decisions you did. Having these conversations now can greatly reduce future conflict and confusion among your family about what your true wishes really are when you’re no longer able to explain your wishes.
A Trusted, Lifelong Guide For You And Your Family
No matter how much, or how little, wealth you plan to pass on—or stand to inherit—it’s critical that you take action now to make sure that wealth is secure and offers the maximum benefit to your family. Every estate plan we create features a built-in legacy planning process, which ensures you can communicate your most treasured values, lessons, and life stories to those you leave behind. These intangible assets form the foundation of your family legacy, and they’re often what we value most of all when it comes to our inheritance.
AB Law, PLLC is a full-service business law and estate planning firm that serves clients throughout Texas. All consultations are free and no question is too silly, ridiculous, or complex. https://calendly.com/ablawpllc www.ab-firm.com