The baby boomer generation expects to leave approximately $30 trillion worth of inheritances to their millennial children over the course of the next three to four decades. If you're a baby boomer, you will no doubt be concerned that your small share of this wealth is appropriately transferred. In this respect, the following five estate planning strategies could assist you with your wealth transfer goals:
- Make sure your kids know what they're getting: Your children might think they're going to inherit millions of dollars one day, when maybe they will only receive $100,000 each -- or much, much less. It's important to be open about your estate planning because: it will make sure they don't fight over your assets after you're gone and it will make sure the distribution of your estate goes as smoothly and successfully as possible.
- Consider an equal distribution: You might not want to do it -- depending on your family dynamics -- but an equal distribution is the best way to keep your family together and prevent a will contest lawsuit or estate battle.
- Don't leave things up to the honesty of one sibling: Make sure you phrase your estate documents to legally codify the distribution plan you have in mind. Trusting one sibling to honestly distribute your estate is a recipe for a family disaster.
- Explain your reasoning: Whatever you choose, explain the "why" to your kids. Even if they don't agree, they will be more accepting and respectful of your choices. Try to explain your reasons before you die and include a note with your will to remind them.
- Consider a trust: Trusts are very flexible documents and estate planners can attach specific guidelines and conditions to the money and assets they leave behind.
Although the $30 trillion baby boomer inheritance amount could change -- depending on advancements in healthcare and changes in the economy -- one thing is certain: As a nation, we're approaching a massive wealth transfer. If you want yours to happen smoothly, lawfully and according to your wishes, make sure you fully understand all of the estate planning options available to you.
Source: AARP, "How to Leave an Inheritance to Your Kids," Jean Chatzky, accessed March 09, 2018