Baby Boomers and their heirs should prepare for the "Great Wealth Transfer."
Many Americans work hard to build financial security for themselves and their loved ones.
Some have more assets than they can spend down in their lifetimes.
According to a recent Altrata article titled "Family Wealth Transfer 2024," those with net worths more than $5 million are estimated to pass around $31 trillion to the next generation in the next ten years.
Yikes!
This transfer will affect financial services, non-profits, families, and luxury goods.
Trillions of dollars are expected to change hands through inheritances in the Great Wealth Transfer.
Without estate planning, you will have no voice in your wealth transfer.
You must have these legal documents in place so that your wishes can be communicated and honored.
Failing to create an estate plan will leave your wealth and loved ones vulnerable to taxes, legal disputes, and other issues.
Members of Generation X will initially benefit from these transfers.
Because members of Generation X are older and in their mid-to-late 40s, they will more likely be inheriting from their parents.
Gen Z and the Millennial Generation will more likely inherit from grandparents.
As a result, the sum of their inheritances will be smaller.
While wealth has many benefits, these individuals face unique estate planning challenges.
What are they?
Succession Planning.
It is growing less common for families to remain in the same town.
As family members move to other states and countries, estate planning complexity increases.
It may be important to work with an experienced estate planning attorney and other advisors who know the laws and regulations of different states and countries.
Generational Differences.
Values can shift between generations.
The older family members should clearly communicate their wishes and principles.
Early Transfers.
Families do not have to wait to die to transfer wealth.
The heads of the family can engage in lifetime giving to help their loved ones as needs arise.
Giving financial gifts requires preparation and understanding of laws to manage these asset transfers effectively.
Estate planning can help those affected by the Great Wealth Transfer.
How can it benefit seniors with significant assets?
Minimize Taxes.
A comprehensive estate plan can reduce estate tax liability.
As a result, your heirs will receive more of your money than the government.
Avoid Legal Disputes.
Having no estate plan or unclear wishes can lead to family conflict and estate battles.
By clearly documenting your wishes, you can prevent loved ones from entanglements with the courts.
Protect Beneficiaries.
If your heirs have financial risks and creditors, you can protect the inheritance from claims against them.
An initial action for wealthy people is to schedule a consultation with an experienced estate planning attorney.
The next step would be to review your assets.
Assets include investments, properties, and personal belongings.
After reviewing your assets, clearly outline how you would like your assets managed and distributed.
If you already have a comprehensive estate plan, review your documents regularly to ensure they align with your current life circumstances.
The Great Wealth Transfer will affect the American economy and millions of families.
Those participating in the transfer should use estate planning to protect their wishes and minimize their tax burdens.
Delaying estate planning could be detrimental to your loved ones.
If you need to create or update your estate plan, you can schedule an initial consultation with Harvest Law KC.
Estate planning is essential to protecting your legacy and loved ones while minimizing taxes to the government.
Poor planning and communication can lead to loved ones being embroiled in estate battles.
Even if an estate plan has been created, it must be reviewed regularly and updated as necessary to align with your current life circumstances.
This post is for informational purposes only and does not provide legal advice. You should contact an attorney for advice concerning any particular issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
Reference: Altrata (Jun. 11, 2024) "Family Wealth Transfer 2024"
REMEMBER: “The choice of a lawyer is an important decision and should not be based solely upon advertisements.”
This statement is required by rule of the Supreme Court of Missouri.
