As baby boomers retire, one question on many minds is how to pass on substantial wealth to younger generations. This significant generational transfer of wealth will impact each family differently. If you are a baby boomer wondering how to pass on generational wealth, there are some best practices to consider for thoughtfully transferring wealth between generations. Here are some key considerations.
Baby Boomer Priorities for Transferring Wealth
Older adults will first ensure their own retirement needs are met. However, if you have excess assets, decide what will happen to them. One option is to help children or grandchildren while you're living so you can witness the impact of your gift. Options include funding a 529 plan for college, paying off student loan debt, or helping with a down payment to pass on generational wealth.
Passing Down Financial Wisdom
You can help with more than just money. Passing down your hard-earned financial wisdom can be even more important. You might consider setting your child up to meet with a financial planner, encouraging contributions to retirement accounts and emergency funds, and stressing the benefits of avoiding high-interest debt. Parents may want to talk to their children about what they might inherit along with creating a will.
Gen X and Millennial Considerations for the Generational Transfer of Wealth
Younger generations may want to remember a few things about the great wealth transfer. First, it's probably better not to make assumptions about inheriting particular assets, be it a house, a business, or a bank account, as part of this generational transfer of wealth. Budgeting and careful planning are always important, and in the interest of smooth family relations, communication is key when it comes to understanding the giver's wishes when using various funds. Managing an inheritance smoothly maintains family ties.
Seeking Guidance on How to Pass on Generational Wealth
Whether transferring wealth or receiving it, reach out for guidance on how to pass on generational wealth. With thoughtful planning, you can pass on lasting financial gifts and wisdom between generations.
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