These five tips will help you prepare for the future
Updating your estate plan may involve several different professionals, such as an estate planning attorney, 401k administrator, insurance agent and wealth adviser.
Tennessee Voices: How ‘great wealth transfer’ changes financial advice
Paul Allen, President and CEO of Wealth Strategies Partners (WSP), spoke about the “great wealth transfer” on the Tennessee Voices video podcast.
- Paul Allen, CFP, MS, is president of Wealth Strategies Partners, a generational wealth management practice.
The “great wealth transfer” signifies the shift of finances from Baby Boomers to descendants or other beneficiaries.
Baby boomers hold more wealth than any other generation. One projection from Cerulli predicts that the great wealth transfer will advance $84 trillion down to the next generation by 2045.
At this point, Baby Boomers should be developing plans for their money after death to ensure their assets are distributed according to their wishes.
As a total wealth management practice, we know more clients than ever before are interested in comprehensive planning services rather than strict investment advice. Families understand the importance and necessity of creating a strategy to ensure a successful transfer of wealth to their beneficiaries.
As the Silent Generation and Baby Boomers prepare to pass down their wealth, here are five tips to keep in mind to help ensure a successful transfer and lasting legacy.
Tennessee Voices podcast: Financial advisor Paul Allen talks about the ‘great wealth transfer’ facing Americans
Focus on your estate objectives
Many people are so focused on their investment portfolios and mutual funds that they overlook their estate objectives.
What kind of legacy do you want to leave? How can certain asset distributions achieve that legacy? Whether you intend to distribute funds evenly among your children, transfer business ownership to a partner, pay for your grandchild’s future education, or leave money to a favorite charity or beloved alma mater, where your wealth goes matters.
It’s normal to feel uncomfortable confronting your own mortality, but it’s imperative to create an estate plan so that your assets end up in the hands you intend them to reach.
Evaluate how your assets are currently titled
After you establish your estate objectives, it is time to evaluate the titling of all assets.
Mistakes in asset titling can lead to irreversible consequences. For example, an ex-spouse may receive life insurance benefits over a current spouse if the ex remains the beneficiary.
Review beneficiaries on all documents and accounts, including trusts, life insurance policies and all other payable on death accounts.
Monitor and adjust your estate plan as needed
Once you establish your estate objectives and intended beneficiaries, update your documents to accurately reflect your intentions.
Don’t stop there; intended beneficiaries, goals and legacy wishes can shift year-over-year based on life changes. Divorce, marriage, childbirth, death, creation or dissolution of business entities, and the ebb and flow of relationships may all constitute adjustments to your estate plan.
As a general rule of thumb, we review clients’ planning documents annually to ensure they remain up-to-date.
Involve the entire family
When preparing for a transfer of wealth, it’s essential to involve the entire family in the planning process, not just the primary decision maker.
Our team makes it a priority to get to know every family member so that when wealth is passed down, all parties are comfortable and confident with the plan because they have been involved in its creation. Unlike other generational wealth practices, many of our advisers are women.
The diverse makeup of our team helps us build trust with every member of the household and become a trusted, go-to resource when life changing events inevitably occur.
Select the right professionals
Updating your estate plan may involve several different professionals, such as an estate planning attorney, 401k administrator, insurance agent and wealth advisor. It is imperative to engage a certified financial planner professional who embraces a comprehensive approach.
This means he or she will address all aspects of your finances and related planning. We refer to each priority area as a room in your financial house and recommend that one professional ensures that the entire financial house remains in order. If one person is not leading the process, pieces of the plan will fall through the cracks.
Whether you are giving or receiving a transfer of wealth, enlist the help of a certified financial planner professional to ensure you establish a plan to help achieve your desired outcomes.
This professional should also build relationships with your beneficiaries and loved ones to educate them on the best ways to manage the assets they inherit.
You’ve worked hard to grow your wealth, so why not ensure the same level of thought and care is used to steward your assets to the next generation?
Paul Allen, CFP, MS, is president of Wealth Strategies Partners, a generational wealth management practice, and can be contacted at paul@wealthstrategiespartners.com.
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