Baby Boomers to Millennials: No Inheritance for You?

Interesting article from the Los Angeles Times. Apparently many Baby Boomers are frowning on leaving an inheritance for their children, including many in the millennial generation. A U.S. Trust (Bank of America’s trust division) survey finds that 49% of millionaires in the Baby Boomer generation don’t plan to leave their children an inheritance. A variety of factors may be in play: (1) people living longer (and corresponding fear of outliving savings), (2) the economic fallout on people’s retirement savings, (3) enjoying spending the wealth that they themselves worked hard to accumulate, (4) helping support elderly parents or adult children who’ve been displaced by economic woes, (5) don’t want to spoil kids or give them a sense of entitlement, and other issues. One Baby Boomer said, “If [my kids] can’t make it on their own now, they can never make it. I’ve done my job. Now I’m going to enjoy life.”

This may also be tied to a developing trend among the very wealthy – billionaires pledging to give their fortunes to charity.  From a tax and estate planning perspective, Baby Boomers would be well advised to remember the increased gifting opportunities available during 2011 and 2012 ($26,000 combined gifts from husband and wife per donee each year, $5 million lifetime gift tax exemption). In some situations, it may also make sense for Baby Boomers to give their children inter-family loans to help with the purchase of a car, home, or business interest, or to consider various business succession options.  Additionally, leveraging trusts, especially multigenerational trusts, is a wise idea in some cases to preserve great amounts of wealth for future generations. Charitable giving is always a wonderful idea to help others and leave a legacy of generosity.

If many of these Baby Boomers disclaimed inheritances from their parents, this study would be misleading, because the bulk of the inheritance would already be waiting in trust for the millennials. If the study is accurate, it may mean that the great structural transfer of wealth between generations (estimated in the trillions) may be much ado about nothing, as Shakespeare would say. Please call me or email me if I can help you or your family with these important estate planning issues.

(c) 2011, Stephen M. Johnson, Esq.


Tips for a Surviving Spouse

Kiplinger Personal Finance provides some helpful tips for surviving spouses in the days following their loved one’s death. Among them: (1) gather financial and estate planning documents (2) assemble a financial support team (accountant, lawyer, broker, banker, etc) (3) assess cash flow (4) collect life insurance benefits (5)  meet with the family’s estate attorney to determine what probate or trust administration needs to be done (6) check with the employer about pension, 401(k) and other benefits (7) roll over the loved one’s IRA (assuming surviving spouse is the only beneficiary) (8) claim a Social Security benefit.

I would add don’t get overwhelmed by the process. Losing a loved one, especially a spouse, is emotionally draining and devastating.  Take life a day at a time.  If you can get 1 item done each day, that’s good progress. Take plenty of time to grieve. Most financial and legal matters can wait a week or two. If I can help with probate or trust administration needs, please contact me.

(C) 2011, Stephen M. Johnson, Esq. All Rights Reserved.