Members of the Silent and Baby Boom generations are expected to transfer more than $80 trillion in assets to their heirs in the next two decades. Financial experts in Louisiana and around the country have named this passing of assets the Great Wealth Transfer, and it worries them because about one in three Americans does not have an estate plan in place. The holiday season is a time when families gather and multiple generations spend several days together, which means it is a good time to discuss estate planning matters.
Sensitive issues
Discussions about end-of-life issues are often uncomfortable, and this is especially true when families have gathered to celebrate the holidays. However, putting these talks off or choosing not to have them at all can lead to higher tax bills and disputes between heirs. When estate planning issues are addressed, one of the first matters discussed should be the estate’s assets and liabilities. This is important because many children believe their parents are richer than they actually are. These misunderstandings can lead to unrealistic plans, bitterness and resentment.
Trusts
Many of the Millennials who will inherit assets during the Great Wealth Transfer will be unprepared to deal with large amounts of money, and some of them will have acted irresponsibly in the past. During holiday season financial talks, it may be wise to discuss the ways that placing assets into trusts can prevent reckless spending and ensure that beneficiaries will still qualify for government programs like Medicare. Trusts also speed up the estate administration process because the assets placed into them are usually not subject to the probate process.
Updating estate plans
The holiday season is also a good time to update an estate plan. Wills and trusts should be revised if children or grandchildren were born after they were drafted, and beneficiaries may need to be added or removed if children have married or divorced. Trusted relatives or friends should be consulted to make sure that they are still willing to serve as executors or trustees, and alternatives should be found if these individuals have passed away or moved to a different part of the country.