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How Will The Coming Wealth Transfer Affect 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 aging Baby Boomers to younger generations in the next few decades. In fact, it’s said to be the largest transfer of inter-generational wealth in history.

Because no one knows exactly how long 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. But studies suggest it’s somewhere between $30 and $50 trillion. Yes, that’s “trillion” with a “T.”

A blessing or a curse?

And while most are talking about the benefits this asset transfer might have for younger generations and the economy, few are talking about its potential negative ramifications. Yet there’s plenty of evidence suggesting that many people, especially younger generations, are woefully unprepared to handle such an inheritance.

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 inter-generational wealth transfers often become a source of tension and dispute among family members, and 70% of such transfers fail by the time they reach the second generation.

Whether you will be inheriting or passing on this wealth, it’s crucial to have a plan in place to reduce the potentially calamitous effects such transfers can lead to. Without proper estate planning, the money and other assets that get passed on can easily become more of a curse than a blessing.

Get proactive

There are several proactive measures you can take to help stave off the risks posed by the big wealth transfer. Beyond having a comprehensive estate plan, openly discussing your values and legacy with your loved ones can be a key way to ensure your planning strategies work exactly as you intended. Here’s what we suggest:

Create a plan

If you haven’t created your 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 or if you have a family yet, all adults over 18 should have some basic planning vehicles in place.

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. We maintain a relationship with our clients long after your initial planning documents are signed, and our built-in systems and processes will ensure your plan is regularly reviewed and updated throughout your lifetime.

Discuss wealth with your family early and often

Don’t put off talking about wealth with your family until you’re in retirement or nearing death. Clearly communicate with your children and grandchildren what wealth means to you and how you’d like them to use the assets they inherit when you pass away. Make such discussions a regular event, so you can address different aspects of wealth and your family legacy as they grow and mature.

When discussing wealth with your family members, focus 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 kids live your values while growing up is often the best way to ensure they carry them on once you’re gone.

Communicate your wealth’s purpose

Outside of clearly communicating your values, you should also discuss the specific purpose(s) 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. Though you can create specific terms and conditions for your wealth’s future use in planning vehicles like a living trust, don’t make your loved ones wait until you’re dead to learn exactly what you want their inheritance used for.

If you want your wealth to be used to fund your children’s college education, provide the down payment on their first home, or invested for their retirement, tell them so. By discussing such things while you’re still around, you can ensure your loved ones know exactly why you made the planning decisions you did. And doing so can greatly reduce future conflict and confusion about what your true wishes really are.

 Secure your wealth, your legacy, and your family’s future

Regardless of how much or how little wealth you plan to pass on—or stand to inherit—it’s vital that you take steps to make sure that wealth is protected and put to the best use possible. As your Personal Family Lawyer®, we have unique processes and systems to help you put the proper planning tools in place to ensure the wealth that’s transferred is not only secure, but that it’s used by your loved ones in the very best way possible.

Moreover, every plan we create has built-in legacy planning services, which can greatly facilitate your ability to communicate your most treasured values, experiences, and stories with the ones you’re leaving behind. By working with us, you can rest assured that the coming wealth transfer offers the maximum benefit for those you love most. Schedule a  Planning Session today to get started.

 

This article is a service of the law firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a  Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love.

Call our office today to schedule a  Planning Session and mention this article to find out how to get this $500 session at no charge.

What to Do With a Cash Windfall

Many of us like to fantasize about winning the lottery. We talk to our friends about how we might spend the money, and we dream about never wanting for anything ever again. Although the odds of winning the lottery are very small, there are other ways that we might come into a major amount of cash in our lives, usually in the form of an inheritance, from a business sale or perhaps even though the settlement of a legal claim.

If you do receive such a windfall, planning ahead beforehand is critical, so that it can be available to benefit yourself, and also your loved ones even after you are gone. Unfortunately, without planning, most people who receive large amounts of money lose it almost as quickly as they receive it.

If you see a windfall coming your way, consider the following steps.

1. Consider putting any large cash amounts you receive into an asset protection trust.

You may even want to consider appointing a co-trustee to govern the trust alongside you. This will mean you can honestly tell friends and family that you do not have unrestricted control to your assets when they come asking for handouts.

2. Hire an advisor you trust to help you invest the assets you receive in a manner that is aligned with your values.

This will support you in using the money in the long-term life you desire; if you need recommendations to a trusted investment advisor, contact us.

3. Update all of your own estate planning documents, including your Will, Revocable Living Trust, Health Care Directives and Power of Attorney, and establish a relationship with a personal estate planning lawyer.

This is so if and when anything happens to you, your family will be supported and they can stay out of court and out of conflict.

 

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she helps you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we she offers a  Planning Session, during which you will get more financially organized than you’ve ever been before, and make the best choices for the people you love. You can begin by calling our office today at (813) 514-2946 to schedule a Planning Session.

Strategic Retirement Planning

Are you approaching retirement, and questioning how you can ensure a smooth transition from working life to retired life?  Walking away from regular paychecks and employer-provided benefits can feel a little nerve-wracking. You can minimize the impact of these major life changes though by planning accordingly, and by keeping these things in mind.

Time It

Get your timing right. Review and understand your employer’s policies on 401(k) matching and profit sharing. Make sure you plan to retire at a time when you can reap all the vested benefits you have coming to you before they expire. Sit down with your company’s HR department to discuss your retirement benefits.

Bridge the Insurance Gap

If you are retiring before the age of 65, you could have a lapse in insurance coverage before you are eligible for Medicare. If your employer, like most employers, doesn’t offer retiree health insurance benefits, look into COBRA insurance to extend your current coverage, or an individual insurance plan to carry you over until Medicare kicks in. Don’t forget about life insurance and long-term care insurance either. If you do not have an insurance advisor you trust, we can refer you to someone, and we can also provide an objective backstop review on any insurance you do have in place to make sure it’s the right amounts and right types for you.

Petition for Your Pension

Apply for your pension at least five months before you retire. Get a benefits statement, and consider your payout options if you have them (e.g. lump sum vs. annuity). Coordinate your pension payout to minimize your tax liability while still meeting your financial needs.

Rearrange Your Retirement Funds

Consider the pros and cons of consolidating accounts and rolling 401(k) funds into an IRA for more investment freedom and easier management. Some retirees find the investment options with employer-provided 401(k)s are cheaper than those bought independently. Make sure you discuss your options with a financial professional and choose the option that maximizes your income and gives you the flexibility you need. As always it is important, of course, to ensure your beneficiary designations are set up to make sure your retirement benefits go exactly where you choose.

Closing Thoughts

Planning a strategic retirement takes forethought, but make sure you don’t short sell yourself on all the perks you may be owed. Make sure you take advantage of all the benefits your employer offers and carefully plan how you will manage your retirement income to minimize tax liabilities. Following these simple steps can help ensure you are financially prepared for retirement.

Attorney Myrna Serrano Setty realizes that estate planning has many moving parts that are impacted by life changes, like retirement.  And that is why she works with a network of trusted advisors in the insurance, tax and financial planning fields. If you haven’t already done so, contact our firm to schedule a Life & Legacy Planning Session. We’ll get you thinking about what you own, what matters most to you and help you make informed and empowered decisions about life and death, for yourself and the people you love.  Call our office today to schedule a Planning Session and mention this article to find out how to get this $500 session at no charge.