You’ve worked hard to accumulate your wealth. If you are like most people, you want to pass at least some of your savings on to future generations. Many people imagine that the inheritance they’re leaving their children and grandchildren will give them the means to thrive and to continue accumulating sizable estates of their own.
A recent Accenture report revealed that over the next 30 to 40 years, $30 trillion in assets will pass from boomers to their heirs in the U.S. alone. What many people don’t know is that an astonishing 70 percent of intergenerational wealth transfers fail by the time they reach the second generation, and a full one-third of people who inherit assets actually have less money saved just two years later. Many people, when faced with an unexpected windfall, end up squandering money.
When it comes to managing inherited wealth, the key to setting your loved ones up for success lies in being open and forthright in your discussions and in carefully planning your estate distribution strategy.
First, be willing to have candid discussions with your loved ones about your wishes and values. Talk to your children and grandchildren about your goals for your nest egg. Let them know what charitable causes matter to you and why, and talk about how you’d like them to use any funds they inherit from you when you die.
Of course, merely telling your loved ones what’s important to you doesn’t mean your wishes will be honored. That’s why it’s so important to implement an estate plan designed to protect what you’ve worked so hard for. By planning ahead using tools like Trusts, funding them with your assets, and structuring distributions in a way that accomplishes your goals, you can be confident knowing you’ve taken steps to help your descendants manage your legacy.
For example, if helping pay for your grandchildren’s education is important to you, you could leave assets in Trust for them, nominating a trusted family member, friend, or professional fiduciary to manage the assets and make distributions to accredited colleges or universities on their behalf. Trusts can also help protect young or financially irresponsible beneficiaries from themselves.
To learn more and to begin planning your own estate strategies, contact us today!