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What You Need to Know About "The Great Wealth Transfer"

What You Need to Know About

Last year marked the beginning of a historic economic event and what economists are calling “The Great Wealth Transfer”.  Over the next several decades, according to US News & World Report, an estimated $30 trillion will be passed to Millennials — who are now representing the largest generation in America — from their aging parents and grandparents throughout the U.S., Canada and the UK. This year, the oldest of the Baby Boomer generation will celebrate their 70th birthday, hitting a critical threshold. U.S. law states that once individuals turn 70.5, they must begin taking a required minimum distribution from most of their tax-sheltered retirement accounts, which requires taxes to be paid on those distributions and signals the beginning of this massive shift in assets.
Additionally, RBC Wealth Management published a fascinating Wealth Transfer Global Report, which outlines several new global trends and the predicted monumental shift in wealth it will cause in our economy. Perhaps the biggest surprise is, “the remarkable gap between intention and action, resulting in a general lack of preparedness.” Research shows, overall individuals have every intention of communicating and transferring their knowledge to the next generation. However, families are often uncomfortable talking about inheritance or plans for after their death, and when they do, their conversations are limited.
This generational migration of wealth will have a tremendous impact on our economy and leave many clients concerned with how to plan for it, how to prepare their heirs, and perhaps most importantly, how to ensure their legacies remain protected and aligned to their values. Both on the family law and estate planning side we’re helping clients, now more than ever, navigate challenges including tax implications, asset protection strategies, relationship agreements, as well as planning for growing and shifting family investments.
What does this mean for you? For Baby Boomers and Millennials alike, it means the importance of planning, education and preparedness from both the financial and legal perspective. We are here to help.

Planning For “The Great Wealth Transfer”

Whatever the situation, here are a few of our top practical tips as you begin planning for your family’s future and the unique impact this great wealth transfer is expected to have on our economy:

1. Assemble a Team:

We know you have a lifetime of finances to sift through, and may be unsure about how to protect or pass on what you’ve built. The first thing we recommend is to seek feedback from a professional — either a trusted financial planner or estate planner. In many cases, as with our firm, both estate planning and family law attorneys will work hand-in-hand with financial advisors to the benefit of each client.  A professional financial or estate planner will walk you through the critical pieces when it comes to aligning your values with your family dynamics. 

2. The Power of a Plan:

While a financial advisor can help create an assessment of all the assets, an estate planning attorney can help build a plan of action.  By working together, both sides can help mitigate risk and plan for future changes to the family dynamic (such as marriages or divorces, inheritances, children, business ownership, death/incapacity and more).  A good estate planning attorney will help you take stock of key information and recommend wealth transfer strategies that assemble a healthy estate plan to fit your specific needs (such as a trust, powers of attorney, advance directive, charitable or legacy gifting, or premarital agreements).  Your estate planning attorney  should also address estate and gift tax issues, which are perhaps one of the most important considerations when it comes to generational wealth transfer.  

3. Communication is Critical: 

How assets are transferred has a big impact on the financial legacy of your family. It is important for your team to understand the intent behind any gifts so they can be part of the process and set your estate up accordingly. Clear communication is important, especially for a young Millennial who may be inheriting assets.  

4. Invest in the value of financial education:

Discussing an inheritance can be a great opportunity to educate the next generation on the value of your gift and begin building financial confidence. We recommend that you connect your heirs with your financial and legal professionals in order to gain some level of financial and legal education prior to inheriting so that your heirs are prepared —and so that your beneficiaries ultimately understand how this inheritance can drive a more holistic approach to planning for their future. It’s important to offer guidance so they can be better prepared to inherit and, ultimately, adhere to your wishes.  

5. Help them help you:

Despite having good intentions, many Millennials aren’t taking the steps necessary to protect their inheritance. According to the RBC Global Wealth Transfer study, less than 30 percent of respondents have a full wealth transfer plan in place. By the time children grow into young adulthood, they are typically mature enough to learn about their family’s wealth and the general plan for its distribution. If an open dialogue is established early on, they will have the time and luxury to learn about your expectations and prepare as they mature - step into business roles, purchase homes, begin serious relationships, have children, etc. By working with an experienced estate planning attorney and wealth advisor, you can help them construct a plan to protect—and even grow—the family wealth for generations to come.  

We Can Help.

Are you interested in learning more? Gevurtz Menashe’s estate planning and family law attorneys are experienced in dealing with all aspects of wealth transfer, estate, gift, relationship agreements, and generation-skipping transfer taxes. We are knowledgeable in current tax law and will ensure that your assets are passed down with minimal taxation. 

Call our Portland offices today at 503-227-1515, our Vancouver offices at 360-823-0410, or schedule a consultation online HERE

*This is general information only and not meant to provide specific legal advice. *

Written by Albert A. Menashe, Founding Shareholder of Gevurtz Menashe. Albert is a member of the Oregon state bar and focuses his practice exclusively on family law issues including divorce, relationship agreements, same-sex marriage issues, and custody and parenting issues.