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Over the next 25 years in the U.S., about $68 trillion in wealth is going to change hands, as it is transferred from older generations – like the aging Baby Boomers – to their younger heirs.  And yet, nearly two-thirds of people with wealth to pass down have not had a conversation with their heirs regarding plans for their assets.

There are many issues surrounding the transfer of wealth to heirs. Many of these conversations can be complex, personal and challenging. And this is perhaps why so many have resisted having this conversation.  But when one understands both the financial and the personal considerations, it will be easier to open a dialogue sooner than later.

Every Family Situation is Different

You may own a business that you’d like to hand down.  Or have children who have very different ideas about spending and saving money.  You may have very young children who will need additional care should anything happen to you before they’re grown.  Or you could want to leave a legacy in the form of a charitable foundation.  Whatever your situation, it’s important to have everyone in the family understand your wishes and your financial positions. A family meeting focused on managing expectations on all sides will certainly avoid confusion down the road. A third-party estate planner  can certainly help facilitate these kinds of communications.

The Financial Considerations

There are three places your assets can go once you’re gone: to charity, to your loved ones, or to taxes.  With a little forward planning and knowledge, you can make sure that you and your heirs pay as little taxes as possible – leaving more for loved ones and charitable causes.  If you are looking to decrease the size of your estate, you are able to gift up to $15,000 (for 2019) annually for as many people as you like without anyone incurring taxes. Another great way to pass on money and reduce the size of your estate is through direct payments – like making college tuition payments directly.  With a reduced estate, you may be able to reduce estate taxes or eliminate them completely.  There are also a number of trusts you can set up in advance to avoid taxes.  Point is, having a comprehensive plan in place for transferring your wealth will definitely pay off in the end – and setting up a program with an estate planner can help you navigate all of the options in a way that works for you.

Involving a Third-Party Executor

Developing and having a plan in place that everyone understands and is aware of is the best way to have things go smoothly as you pass the torch to the next generation.  In addition to a plan for your assets, having a current will and healthcare proxy in place is important.  Directing a power of attorney should you become incapacitated is also important.  It’s a lot to consider and keep current, which is why having a third party as an executor of your estate is the best way to keep your mind at ease.  A good estate planner can also facilitate communications between family members both when creating plans and also when executing them.

Leaving behind a legacy that meets our wishes and offers stability to our heirs starts with a solid plan for transferring your wealth. Putting a solid plan in place will help you avoid probate, and headaches.

To learn more about how you can transfer wealth to the next generation, contact our USB Wealth Management team at 866.872.1866 or drop us a line.

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