Preparing for The Great Wealth Transfer: A Guide for Every Generation

The Great Wealth Transfer represents a significant reallocation of wealth across generations and to charitable organizations over the next two decades. By the end of 2045, Cerulli Associates projects that $84 trillion will change hands, mostly from Baby Boomers to their Gen-X and Millennial heirs.

This massive shift underscores the significance of careful financial planning and wealth management for both benefactors and inheritors alike. By taking practical steps to prepare, members of every generation can navigate The Great Wealth Transfer confidently and efficiently.

Here’s How Each Generation Can Prepare for The Great Wealth Transfer:

Baby Boomers: Thorough Estate Planning Is Key for an Efficient Wealth Transfer

According to data from Cerulli, Baby Boomers will bequeath more than $53 trillion in the coming decades, representing 63% of all wealth transfers. For members of this generation, careful estate planning is imperative regardless of estate size or complexity.

While everyone’s estate plan is unique, the following documents can help ensure a smooth wealth transfer in alignment with your wishes.

• A last will and testament is a legal document that outlines your intentions for the distribution of your property and assets after your death.
• Much like a will, a revocable living trust outlines how to handle your assets after your death; however, assets in a living trust bypass the probate process, expediting the transfer and providing privacy regarding the details of your estate.
• Updated beneficiary designations for retirement accounts, annuities, and life insurance policies are crucial, as these designations supersede your will.
• A durable financial power of attorney designates a reliable individual to make financial decisions on your behalf if you become ill or incapacitated, safeguarding your wealth during your lifetime.

It’s wise to consult with an experienced estate planning attorney to ensure your estate plan accurately reflects your objectives. In addition, SageMint Wealth can guide you through the tax implications of transferring wealth and help you implement strategies such as gifting and charitable giving to minimize your potential burden.

Gen-Xers: Engage in Comprehensive Financial Planning to Prepare for a Windfall

As their Baby Boomer and Silent Generation parents advance in years, many Gen-Xers are poised to inherit wealth within the next decade. This impending transfer isn’t just about acquiring assets, however; it’s about responsibly managing this wealth and ensuring it lasts.

Comprehensive financial planning can help you prepare for a potential windfall. Indeed, developing a framework for investing your assets and navigating financial decisions can help seamlessly integrate your newfound wealth into your financial plan when the time comes.

Before the wealth transfer occurs, it’s also important to understand the potential tax implications and legal responsibilities that come with an inheritance. If you expect to inherit substantial wealth, consider assembling a team of experts—for example, an estate planning attorney, tax advisor, and financial planner—to plan accordingly for these intricacies.

Lastly, inheriting wealth may mean creating a new vision for your life, whether it be retiring ahead of schedule, purchasing a vacation home, or funding your children’s education. By approaching an imminent wealth transfer with a comprehensive and thoughtful financial plan, you can make the most of your windfall, ensuring it supports your financial well-being and aligns with your life goals.

Millennials: Boost Your Financial Literacy in Anticipation of a Future Inheritance

Millennials are likely to benefit most from The Great Wealth Transfer, as they’re the typical children of the Baby Boomer generation. According to WealthEngine’s 2019 Millennial Wealth Report, Millennials will hold five times as much wealth by 2030 as they did at the beginning of the decade.

However, Millennials are also more likely to experience financial anxiety about their impending inheritances. In fact, a recent report from New York Life found that only 21% of Millennials who expect to inherit feel comfortable managing wealth.

As a Millennial, therefore, a focus on education is crucial to boost your financial confidence in anticipation of this massive wealth transfer. Here are some steps you can take to bolster your financial literacy:

• Leverage online resources. There are countless online tools, courses, and platforms dedicated to enhancing financial knowledge—many of which are free.
• Participate in financial workshops. Attending workshops and webinars can provide valuable insights into financial planning, tax strategies, and investment options.
• Seek professional guidance. It’s never too early to engage with financial professionals who can offer personalized advice and education on various aspects of wealth management.

Financial education can empower you to make informed decisions about your newfound wealth. Ultimately, cultivating financial literacy can help alleviate your current financial anxiety and pave the way for a more secure and prosperous future.

Partner with SageMint Wealth to Effectively Navigate The Great Wealth Transfer

For members of all generations, effectively navigating The Great Wealth Transfer will require financial education, comprehensive planning, and prudent wealth management. With the right preparation and counsel, you can plant the seeds for a legacy that serves your family’s needs for generations to come.

SageMint Wealth can guide you through the intricacies of transferring and managing wealth, ensuring your approach is both tax-efficient and legally sound. Together, we’ll develop a financial plan that’s tailored to your unique values and supports your long-term objectives. Contact us to get started.