A staggering $68 trillion is on the verge of being passed down from baby boomers to their children creating “The Great Wealth Transfer.” This wealth transfer will make the Millennial generation one of the richest in American history. With this great sum comes a lot of responsibility and consideration for all parts of the family.
Today, we have compiled some of the most important things to consider related to “The Great Wealth Transfer” and how you can take them into account as your family navigates this historical time.
1. Transparency and Financial Literacy
One key consideration is the concept of transparency and financial literacy.
According to CNBC.com, ”Roughly 26% of adult children would rather deal with their parents’ estate after they die than talk about it while they are living. Further, 19% said they don’t mind receiving nothing at all as long as they don’t have that talk with their parents.”
Although a large percentage of adult kids do not want to have a financial conversation about generational wealth, it can be a root cause of conflicts among living relatives after you are no longer around. It is very important to have conversations about inheritance with your kids while you can state your wishes clearly and work through related conflicts.
Encouraging financial literacy can also help preserve your family’s wealth. Understanding how investments grow, how they can be protected and passed down are crucial skills that become increasingly more important with larger sums of money.
Offering or initiating education regarding the responsibilities associated with inheritance can help ensure it is used effectively.
We have also compiled a few tips for talking to adult kids about inheritance here to help you facilitate a successful conversation.
2. Taxes
The next important consideration are tax implications. Ensuring all estate and tax planning measures are in place helps pass along your wealth in the wisest way possible to avoid unnecessary tax bills.
CNBC.com notes that taxpayers can gift as much as $12.06 million during their lifetimes without an up to 40% levy. That total is above and beyond the annual gift-tax exclusion, which allows you to make an unlimited number of gifts of up to a certain amount (in 2022, it’s $16,000) per person each year without incurring any taxes.
Utilizing trusts and following the annual gift-tax exclusion amounts will help pass along generational wealth in the best way possible. This helps ensure your wealth not only passes along to your kids but offers the best opportunity to support generations to come.
3. Discuss with a Financial Advisor
Lastly, consider working with a financial advisor or representative, if you are not already. There may be extra tax advantages or elements you haven’t quite considered that could be taken into consideration. Having a second set of eyes on your inheritance plan will help ensure the outcome aligns with your financial goals.
Bankers Life Securities is Here
Bankers Life Securities is here to support you as you invest in your family’s generational wealth and well-being. Reach out to a financial representative with questions or concerns related to your personal wealth transfer. Start at BankersLife.com to learn more.
Bankers Life Securities, Inc., Bankers Life Advisory Services, Inc., and their representatives do not provide legal or tax advice. Each individual should seek specific advice from their own tax or legal advisors.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.
Bankers Life is the marketing brand of various affiliated companies of CNO Financial Group including, Bankers Life and Casualty Company, Bankers Life Securities, Inc., and Bankers Life Advisory Services, Inc. Non-affiliated insurance products are offered through Bankers Life Securities General Agency, Inc., (dba BL General Insurance Agency, Inc., AK, AL, CA, NV, PA).
Securities and variable annuities offered through Bankers Life Securities, Inc. Member, FINRA/SIPC (dba BL Securities Inc., AL, GA, IA, IL, MI, NV, PA). Advisory products and services offered by Bankers Life Advisory Services, Inc. SEC Registered Investment Adviser (dba BL Advisory Services, Inc., AL, GA, IA, MT, NV, PA).
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.
Investments are: Not Guaranteed—Involve Risk—May Lose Value.
