Will The Coming Wealth Transfer Be A Blessing Or A Curse For Your Family?

Whether it’s called “The Great Wealth Transfer,” “The Silver Tsunami,” or some other catchy sounding name, it’s a fact that a 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. Yes, that’s “trillion” with a “t.”

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.

In fact, an Ohio State University study found that one third of people who received an inheritance had a negative savings within two years of getting the money. Another study by The Williams Group found that intergenerational wealth transfers often become a source of tension and conflict among family members, and 70% of such transfers fail by the time they reach the second generation. 

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 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. If you have yet to get your estate plan started, meet with Simpson Law Firm right away to get this crucial first step handled.

From there, 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. 

Our estate planning process features proprietary systems designed to ensure your estate plan is regularly reviewed and updated over your lifetime, so you don’t need to worry about overlooking anything, as your family, the law, and your assets change over time.

02 - Talk about wealth with your family early and often

Don’t put off talking about wealth with your family until you are in retirement or nearing death. As soon as possible, 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. 

With everyone gathering under one roof for the coming holiday season, that may be an ideal time to have this discussion. 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 are no longer around.

03 - Discuss your wealth’s purpose

Outside of clearly communicating your values, 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 are still around, you can make certain your loved ones know why you made the estate planning decisions you did. And having these conversations now can greatly reduce future conflict and confusion among your family about what your true wishes really are when you are 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. At Simpson Law Firm, our estate planning  is designed to ensure the wealth that’s transferred is not only protected, but that it’s used by your loved ones in the very best way possible.

We will serve as your trusted, lifelong guide to ensure you make a lifetime of wise, forward-thinking choices for yourself and those you love most, and we will offer your loved ones the support they need to make the most important legal and financial decisions when you are no longer there to guide them. With our expert, caring counsel, you can rest easy knowing that the coming wealth transfer will offer you and your loved ones the most benefit possible, with the least amount of risk. Schedule your visit with us to get your estate plan started today.

This article is a service of Simpson Law Firm. We do not just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. We offer an Estate Planning session, during which you will get more financially organized than you’ve ever been before and we will assist you in making all the best choices for the people you love. You can begin by contacting us here, https://simpsonestatelaw.com/contact-us or calling us at 803-764-9555, and one of our friendly client service assistants will help you set up your consultation.