The number is staggering to comprehend: $60 trillion. For the record, that’s $60,000,000,000,000 – a 6 with 13 zeroes. That’s how much money is expected to be passed down to various generations over the next 25 years in what is simply being called the Great Wealth Transfer.
Members of the Silent Generation (born between 1925 and 1945) and Baby Boomers (born between 1946 and 1964) will leave this collective amassed fortune to children, grandchildren, other heirs, and charities. But how and when they do so is a multi-trillion-dollar topic of great importance – one your family should be discussing.
Americans are living longer – life expectancy is now nearly 80, and the fastest growing demographic in our country is those aged over 100. In many cases, this also means that wealth transfer to the next generation could be significantly delayed. Only a few decades ago, adult children typically received an inheritance from their parents in their 40s or 50s when those extra funds helped pay off a mortgage, sent grandchildren to college or allowed for family vacations and other lifestyle benefits. But with longer lifespans, the next generation often receives an inheritance in their 60s and 70s, well past when it could have been of the most benefit.
For high-net-worth families, this is the time to discuss whether it makes sense to begin passing assets onto children, grandchildren, or charities before death while both you and they can witness its rewards. Also, getting assets out of your estate now and letting the future appreciation of those assets accrue to beneficiaries rather than to you, can result in sizable estate tax savings someday.
It is likely you have a long life ahead, so now is the time to consider these objectives:
- Clearly state and communicate to your family members and wealth advisors, your goals and values, as they relate to money and family. Make sure everyone is on the same page.
- Your values can be conveyed through a family meeting. Our team has facilitated dozens of these for client families and this strategy may be just right for yours, as well. The conversations can be delicate at times, but it is usually best to have a family meeting while you are still living, so your intentions are clear.
- Consider skipping a generation. Many parents are now skipping their aging adult children, and instead are creating plans to help their grandchildren and great-grandchildren get started in life.
- Create and regularly update your estate documents to reflect your choice of heirs or beneficiaries, as well as the timeframe for asset transfer.
- Help your family understand the challenges that lie ahead for you as you age. What do you expect if you fall ill or become incapacitated? Do you prefer to receive care at home, a senior living community or full-skilled nursing? Answers to questions such as these will prepare them for the responsibilities and circumstances in your later years.
- Make it a point to introduce your heirs to your wealth advisors, so they know where to turn for help when needed, resulting in a more seamless and less stressful transition after passing.
- Encourage your heirs to begin their own estate and financial plans to make them better prepared to accept their future inheritance.
You are not alone! All successful families have complex dynamics across multiple generations with diverse values, views, and social circumstances. It is always the goal to create a wealth transfer strategy that does what is best for all involved.
Our team at The Trust Company can help you navigate this process and develop your wealth transfer plan. Start today by contacting our experienced team of wealth advocates and trust officers.
The Sanibel Captiva Trust Company is an independent trust company with $3.5 billion in assets under management that provides Family Office and Wealth Management Services, including investment management, trust administration and financial counsel to high-net-worth individuals, families, businesses, foundations and endowments. Founded in 2001 as a state-chartered independent trust company, the firm is focused on wealth management services that are absolute-return oriented and performance driven. Each portfolio is separately managed and customized specifically to the client’s yield and cash-flow requirements. The Naples Trust Company and The Tampa Bay Trust Company are divisions of The Sanibel Captiva Trust Company. Offices in Sanibel-Captiva, Fort Myers, Naples, Marco Island, Tampa, Belleair Bluffs and Tarpon Springs. www.sancaptrustco.com
LEGAL, INVESTMENT AND TAX NOTICE: This information is not intended to be and should not be treated as legal advice, investment advice or tax advice. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.
Not FDIC Insured | No Guarantee | May Lose Value
Jeffrey A. Muddell, CFP®
Sanibel Market President
