During what has been dubbed the Great Wealth Transfer by journalists and financial planners, the Baby Boomer generation (born between 1946-1964) is projected to transfer around $84 trillion in wealth and assets to Generation X (born between 1965-1980), Millennials (born between 1981-1996), and charities by the year 2045, according to Cerulli Associates. 

For many, wealth is associated with a greater sense of responsibility, complexity, and planning. Without a plan, the transfer of wealth may not go the way an individual desires and could create unnecessary hardship for those inheriting or dividing the wealth when they pass away.

At our passing, assets can either go to the government in the form of taxes, to charities as a gift, or to a loved one as an inheritance. There are many strategies that can be implemented to ensure more of one’s wealth goes to the people or places they  it to go to.

Consider your goals

• What does wealth mean to you? 
• Is it the abundance of material possessions? 
• Is it being able to care for others? 
• Is it giving of your time and talents? 
• What do you want your wealth to accomplish after your time on earth has ended? 
• What is the legacy you want to leave to the next generation?

Your answers to these questions may influence how you plan for your own transfer of wealth.

Plan

Baby Boomers have a greater percentage of wealth and assets in the U.S. economy than any previous generation, but without proper estate planning, these assets may not go where the current owner desires. A financial planner can help you preserve your wealth so that it can be best used to fulfill your wishes

A financial planner can also help you find tax-efficient ways to transfer wealth now. For example, in 2023, the annual gift tax exclusion is $17,000. That is the maximum amount that can be gifted to any number of people, per year, without counting against our lifetime exclusion. Many also want some of their wealth to go to charity. Having a charity named as a beneficiary of qualified assets may be something an individual has never thought of but could save their heirs some tax dollars. These are just a couple of the many ways you could begin planning to transfer wealth – both now and after your passing.  

Educate

According to a study conducted in 2018 by the TIAA Institute, only 11% of Millennials displayed a “relatively high” level of financial literacy, yet this generation is largely set to inherit the largest transfer of wealth in U.S. history. Historically, most familial wealth is lost in the second and third generations. Open communication and family meetings are critical to help prevent the loss of wealth from generation to generation. Now is the time to educate the next generation and set them up with tools they will need to manage wealth. Share your knowledge, talent, and wisdom today!

The bottom line

Passing on wealth – in any form – takes planning. Give yourself and your loved ones’ peace of mind by laying out clear goals for the future, planning for your transfer of wealth, and educating your loved ones to make your transfer of wealth both successful and beneficial. Syverson Strege has worked – and continues to work with – many clients and their families to educate them on the most tax-efficient and advantageous ways to transfer wealth.

While passing on wealth is extremely valuable, investing in relationships with your time, kindness, compassion, and wisdom is a priceless inheritance for those you love.

If you (or someone you know) need help thinking through the transfer of your wealth, call Syverson Strege at (515) 225-6000 to schedule a complimentary, no obligation, confidential consultation.