October 10/05/2017
Marc Rittersporn/marc@integritt.com
Maybe we should call them “Generation Generous.”
Over the next few decades, Baby Boomers will pass down an estimated $30 trillion in assets to their children and grandchildren.
It’s money they’ve worked hard to save and want their loved ones to have. Most Boomers, perhaps because they simply can’t imagine growing old, much less dying, have done little to prepare for this epic transfer of wealth. Meanwhile, their children — mostly Millennials are largely skeptical of professional financial services -and are confident they can use do-it-yourself digital tools.
They’re both wrong, of course.
Solid planning can help prevent mistakes that could cause potential arguments or lawsuits.
1. Get your children involved with you and your financial professional early on.
At least make an introduction to give them a basic understanding of what’s important to you. If you’re comfortable getting into details, consider sharing the types of assets you’ll leave and how you would like them to be divided. You may be surprised at the things that can cause arguments down the road.
2. Talk to your financial professional about tax-efficient strategies.
I believe and have read many articles that say a majority of the heirs who inherit an IRA take it as a lump sum, pay all the taxes and blow it within nine months. If this isn’t what you want for your kids — and their kids — talk about multi-generational IRAs.
3. Choose a capable decision-maker.
After all debts have been settled, it is up to the executor or successor trustee to distribute the assets to heirs according to the provisions of your will. He or she may have to deal with disappointed family members or others who feel they didn’t get their due and will drag out the process. We think it should be someone who is well-liked, respected, persistent and business-minded, as this is a large responsibility and shouldn’t be taken lightly.
4. Make sure your health care — and end of life — wishes have been made clear to all family members.
Tell them specifically what you want to happen, and try to have that conversation with them all at the same time. This is where we can see fights. For example, one child wants to hold on and keep Mom on a respirator and/or feeding tube. And no one is sure what Mom really wanted. Make sure your wishes are well-documented.
5. Talk about asset protection.
The last thing you want is for some or all of the money you leave to your children and/or grandchildren to go to a potential ex-son-in-law or ex-daughter-in-law. There may be ways to prevent that through proper estate planning.
It all starts with communication with your loved ones and your team of financial professionals
Just lay it out there to help reduce any problems so everyone knows what Mom and Dad want.