We are entering an era that is known as the “Great Wealth Transfer.” Over the next 20 years, an estimated $84 trillion (that’s right, trillion with a “T”) is due to be left to future generations as Baby Boomers pass away or gift their assets while they’re still alive.
If you’re a Baby Boomer or a person that has been able to accumulate wealth, you will be able to make life a bit easier for your children and grandchildren by way of inheritance. While you want them to appreciate their good fortune – especially if your parents weren’t able to do the same for you – you likely don’t want them to feel “Inheritance Guilt.”
Inheritance Guilt is not an uncommon phenomenon among those who inherit a substantial amount of money or other assets. This doesn’t have to mean millions of dollars. People can experience inheritance guilt over any sum of money that’s unexpected or far more than they’ve ever had.
The reasons behind inheritance guilt are varied. When parents or grandparents have lived frugally their whole lives and then leave a large inheritance, their heirs may feel guilt that they never spent it on themselves. If a parent built up a successful business and significant assets, an adult child who’s still figuring out what they want to do may feel like they don’t deserve the inheritance.
How can you prevent inheritance guilt?
One way is to minimize any potential shock. While you don’t need to give your heirs exact numbers (and likely cannot), you can give them some idea of what kind of assets you’ll be able to leave them.
You may want to connect them with financial and tax advisors, so they’ll be better prepared to handle it. By discussing your estate plan, they also have the chance to ask you to direct some of the assets intended for them into their children’s college funds or maybe to a charitable organization they support.
By talking to them about their inheritance, you can discuss how you hope they’ll use it – such as buying a home, starting a business or making sound investments that will grow substantially. This will help give them a purpose for the assets – which can prevent them from misspending. If that’s a real concern, however, you can place the assets in a trust so they don’t have direct access to them.
“Giving while living” is the new rage
Baby boomers and older generations are leaning into the trend of “giving while living,” passing assets to their loved ones while they are alive rather than in a will or trust after death. There are compelling reasons to share your wealth while you are alive – and potentially avoid inheritance guilt after you pass. The largest benefit of “Giving while living” is that you are able to experience the joy of sharing your financial legacy with your family. “Giving while living” can be done through gifting and trusts. Be sure you discuss all tax and legal considerations with your lawyer and financial advisor before proceeding!
Have an estate plan
Every family is unique. Having an experienced estate planning attorney can help you make the best decisions for yourself and your family.
If you, your parents, or your loved ones would like to discuss estate planning, give us a call at Monaco Cooper Lamme & Carr, PLLC. We are here to help.
Phone: (518) 855-3535
Email: info@mclclaw.com