Broker Check

The Tough Conversations about Intergenerational Estate Planning

| July 05, 2016
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There are two scenarios where lack of planning and communication regarding inheritances can create discourse – not receiving an expected inheritance and receiving an unexpected inheritance. Although both situations can cause financial and emotional repercussions, many people are uncomfortable starting conversations on these important matters for fear of creating relationship problems within the family.

Unmet inheritance expectations can happen for a variety of reasons. People are living longer, and those in long-term care situations may be using funds to cover those expenses, leaving little or nothing to be passed on. Others may choose to bequeath their money to an organization or cause they care deeply about as part of their legacy.

On the other hand, not knowing an inheritance is coming may leave heirs ill-prepared to receive these funds. Some respond with a spending spree, while others become somewhat paralyzed, fearing they will make a mistake and dishonor the parent who worked so hard to leave them a cushion. Even if heirs find a reasonable middle ground, an unexpected inheritance can push them into a higher tax bracket or trigger the alternative minimum tax.

Communication is essential even though it is difficult for parents and children to discuss how wealth will be transferred at the time of a parent’s death. An intergenerational estate plan can guide families through these uncomfortable topics and address the parent’s plan to distribute wealth, the impact that wealth will have on the recipient and the parent’s need to mitigate taxes. It can also eliminate the surprise element if their plans do not include passing funds to family members.

Whether you are the parent or the child, we can help initiate and guide conversations to ensure both generations are ready for the inevitable. Call our office today to discuss the next steps related to your intergenerational estate plan.

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