No generation in American history has acquired as much wealth as Baby Boomers, according to Merrill Lynch. They note that this wealth has now reached roughly $84 trillion. Over the next two decades, it will be passed down to future generations. Most of them will be either be Gen X or Millennials, although grandchildren in Gen Z may also benefit. The movement of this amount of money from one generation to the next is being called the Great Wealth Transfer.
If you and your family are heading toward this transfer, it’s important to be ready, and that means making an estate plan. Here are a few ways that planning can help at this time.
Making your intentions clear
First of all, an estate plan makes your intentions clear to your family members. This lowers the odds of estate disputes. You can help keep future generations on good terms while distributing your assets as you see fit.
Deciding how to use the money
Another benefit of estate planning is that you can take action if you already know how you want the money to be used. Maybe you’d like it to pay for the college education of some of your beneficiaries, for example, because you know how high college tuition costs have climbed. You could put the money in a trust with this specific purpose.
Managing expectations
Working on an estate plan in advance can also be helpful if you talk with your family members. In some cases, complications arise when there are mismatched expectations – such as two beneficiaries who both thought they would inherit the same item. By discussing the process in advance, you can provide explanations for your decisions, tell heirs what they should really expect, and find out who is even interested in certain assets – from a family home to a business.
The above are just a few examples of how estate planning can help as the Great Wealth Transfer approaches. Take the time to look into all of your legal options.