New York Estate Planning & Elder Law Blog
Estate planning is a complicated process that involves a great deal of different nuances and other important aspects that can sometimes be overlooked. One of the most overlooked aspects of estate planning is preparing heirs for inheritance from an early age. According to a recent article from InvestmentNews.com, not doing so is one of the reasons that far less wealth was transferred to baby boomers from previous generations. Now, by engaging in responsible and comprehensive estate planning strategies with an experienced estate planning attorney, you can work productively to make sure that you are able to transfer as much of your wealth as possible to future generations according to your wishes.
Factors that Diminish Wealth Transfers
Being aware of various factors that can diminish wealth transfers may help you avoid those pitfalls. These factors include:
- Uncertainty in financial markets that negatively impact your investment portfolio;
- Increased lifespan that increases the amount of money you need for retirement and long-term care;
- Failure to engage in effective estate planning or designing an ineffective estate plan;
- Failure to continuously revisit and revise your estate plan as needed; and
- Failure to appropriately prepare heirs for inheritance, among others.
Not all of these factors are necessarily under your control. However, comprehensive estate planning can help you effectively avoid the negative consequences that might otherwise accompany these issues.
Strategies for Increasing Wealth Transfers
There are a number of different strategies that can be employed to increase the impact of wealth transfers. One of the first ways to improve the effectiveness of wealth transfers is teaching newer generations financial management skills as soon as possible. By helping younger generations learn how to budget responsibly and approach financial situations cautiously and carefully, you will likely have a significant impact on their ability to retain wealth and help assets continue to grow.
Additionally, designing your Will responsibly can help make sure that the assets to leave to your heirs are utilized wisely. You may desire to leave a large amount of money to a young individual, but that is rarely the best choice. Using mechanisms like trusts that can kick in at a specific age or only make minimum disbursements from the funds within the trust is often a better option that can help instill the importance of responsible financial management in younger individuals that may not otherwise have the tools to handle large inheritances. Trusts can also be effective ways at minimizing certain tax penalties, which means that they can leave you with additional assets to transfer as opposed to the assets you could transfer if they were all included in the total value of your estate.
As mentioned, one of the most effective strategies to increase the viability of wealth transfers is to keep your heirs informed. This may mean having multigenerational meetings to help all of your heirs understand your estate planning goals. It may also mean more in-depth conversations with various heirs about the assets you are considering transferring to them so that they understand the value of such assets as well as the potential for those assets to provide financial security. While conversations about estate planning can often be unpleasant, they are an important part of making sure you have created a solid, secure estate plan capable of transferring as much wealth as possible to your heirs.