The Baby Boomer generation is on track to inherit as much as $8.4 trillion over the next fifteen years, according to a recent report from Boston College’s Center for Retirement Research. An article in the New York Times recently explored some of the complicated issues that come along with receiving an inheritance. Not all of the issues are financial in nature. The article discusses a process that many experience, in which they transfer the emotional attachment they had to their parents into the physical things they left behind.
The article also relates how many Boomers suffer from what my dad always called “paralysis of analysis” when deciding what they should do with their inheritance. Instead of picking from among several acceptable options, they get stuck and end up letting large amounts of money sit in low interest accounts for years.
Those who are more decisive are able to use their inheritance to pursue new possibilities, such as starting a business, traveling, or retiring.
Are you expecting to receive an inheritance? We have assembled a few tips for how you should plan ahead:
Talk to Your Parents About Their Estate Plan. Lots of folks in their 70’s, 80’s, and 90’s are not aware of the changes and advances that taken place in the area of estate planning over the years. Many of them think that a last will and testament is all they need. If they are leaving behind a significant inheritance, you should talk to them about leaving it in a way that will protect it from your potential creditors, divorce, and bankruptcy.
You should also help them understand the need for incapacity planning, in case they need you to manage their finances or make health care decisions for them.
Create an Estate Plan for Your Own Family. No one knows what the future holds. That means that the inheritance you are expecting may pass on to your own kids at some point. Make sure that it ends up in their hands and not in the hands of strangers.
Do tax planning. Your inheritance may include many different types of assets. Make sure that you and your parents are educated about the potential tax consequences associated with different types of property and plan accordingly.
Financial planners advise that you shouldn’t just sit on your inheritance. Instead, explore the ways that you and your loved ones can benefit from it. Don’t treat inherited assets like a memorial; use them as your parents intended—to make life better for you and your family.
To learn more about the legal and financial protections that are available for the well-prepared, contact our office to schedule a time to sit down and talk. Because this planning is so important, I will waive the $750 Family Wealth Planning Session fee for the first two people who mention this article. Call today and mention this article!
