Currently, Baby Boomers are the wealthiest generation of all time, and they are set to leave their wealth to their children, generally of the X and Y (Millennial) generation. With mounting college loans, and the rising cost of living, Millennials are poised to inherit the vast majority of their money to which will completely change their financial future. Boomers were fortunate to grow their wealth through the 1980s -1990s, benefitting from great economies, rise of technology and high paying jobs. Since the Millennial generation is slightly smaller than the Boomers, they stand to inherit a more concentrated amount upon transferal. This event has been coined as, “The Great Wealth Transfer” by Coldwell Banker. Coldwell Banker has been studying this segment greatly to understand what they will do with this wealth moving forward.
The Great Wealth Transfer will see an estimated $68 trillion passed down in the next 20-30 years. And by 2030, Millennials will be five times richer than they are today. In the next five to ten years you’ll begin to see the tipping point of the transfer. If you are a Boomer approaching retirement, it’s important to start thinking about wealth transfer strategies now so you can preserve as much as possible. For example, be mindful of taxes. Set up a Trust so you can dictate how your wealth will be distributed to beneficiaries and how it should be spent. Plus, a Trust will minimize estate taxes and keep you out of the costly, public, Probate court. Start to think about your long-term care needs now, well before such an event arises. If you don’t have long term care insurance set up, remember to think about this in the near future, as the wealth you stand to transfer could be wiped out in just a few short years.
Here are a few other tips we recommend to help plan for your future and preserve your legacy:
Teach: Teach your children about estate planning and how to keep your family legacy alive. Multi-generational planning is key to building a lasting impact for you and your family. At Wiles, we look at estate planning holistically. Our approach not only includes the tangible objects and assets you’d like to protect or distribute; it also helps you ensure the intangible assets you have are also passed down – morals, values, philosophies, and family narratives. We’ll work directly with you to create a strategy that protects and preserves your family legacy, providing tools to help guide instruction to loved ones. We’ll even help you craft a Legacy Letter so you can directly speak your wishes and thoughts to loved ones. If you want to create a family legacy, the best place to start is mentoring your children in the appropriate use and management of the estate, and preparing them for your passing.
Talk Openly: An often-sticky aspect of estate planning is preparing beneficiaries to receive money and property, as it requires an open conversation about your wishes. Let your beneficiaries know your plan well in advance and give them the time to come up with any questions they may have. This will allow them to feel adequately prepared to suddenly receive large amounts of cash or property. Work through hard questions as a family, so you are on the same page when the money is transferred. Surprises often cause disputes amongst siblings.
Seek Advice: Perhaps your estate is very complicated, like multi-owned property, portfolio of stocks, bonds, cash, and investment accounts. If that is the case, consider seeing advice with an expert on the best planning strategies. At Wiles, we would love to help your beneficiaries understand the implications and allow them to achieve the most benefits from the accounts left to them. We can help make the complicated feel easier to understand and compartmentalize.
Discuss Options: Not everything is cookie cutter for distribution. Some inheritance may be complicated like owning property or businesses with other family members. If you have a large amount of real estate, or commercial property, make sure your beneficiaries have been taught how to manage such properties and who else may be a co-owner. Discuss how these properties are structured and how they plan to be passed – through a Trust or LLC, or family limited partnership. Most importantly, help establish an easy plan if your beneficiary would like to exit from your arrangement that is fair to all parties.
Consider Protection: If your beneficiary may stand at some risk, consider asset protection to prevent significant loss of their inheritance.
Gift Now: In many cases, it makes sense for parents to give their children a portion of the estate now. This can help ease tax burdens but also can help parents observe how their children will manage estate moving forward. In some cases, parents prefer knowing that parts of their estate are enjoyed while they are alive. Whether you gift now, give a lump sum, or provide installments, the safest avenue to transfer your wealth is through a Trust. This option gives you the most flexibility, control and protection over the assets you worked a lifetime to accumulate and build.
Contact Our Experienced South Carolina Estate Planning Attorneys
Don’t wait any longer to plan your estate. Give your children the gift of a preserved family legacy, today. Contact Wiles Law Firm to speak with our experienced estate planning attorneys. We can help you take those first steps and arrange the conversations needed with family to plan out your legacy. We are highly experienced in preparing Wills, Trusts and other essential estate planning documents. When you become our client, you will have peace of mind, knowing that your family and your future will be protected.