Multi-Generational Financial Planning: Considerations for Transferring Wealth

By John C. Fales

Should we include our children in conversations about inheritance, our net worth and our estate plan?

Should we be gifting assets to our children along the way or should we control the money until it transfers to them upon death?

How do we teach our children and grandchildren to be smart with money?

When an individual or couple has more than enough assets to meet their personal needs, thoughts often turn to how best to provide for and transfer wealth to the next generations.

The ability to set future generations of our family up for financial success can feel like a great accomplishment, but one that comes with concerns on doing it properly.

If you’re not sure where to start in planning wealth transfer for your family, consider these factors:

1. A Foundation of Education

If you have accumulated a comfortable net worth, you have probably done so by making sound financial decisions and being prudent with your money. Have you taught your children and grandchildren to do the same?

Wealth transfer should be done with a foundation of intentional education and planning, so that future generations are equipped to handle the responsibility of wealth.

2. Annual Gifts and Trusts

Would gifting assets to children or grandchildren make sense for your situation (or theirs)? Would it be better to transfer assets as a lump sum, or perhaps place them in a trust with distribution guidelines? These are questions to ask when determining the timing and method of wealth transfer.

3. Charitable Giving

One way to immediately get the next generations involved with family wealth management could be to create a charitable foundation or donor-advised fund. You could choose a cause important to you or your entire family and involve family members in managing the entity. This is also a way to teach financial management principles and to gauge how comfortable each family member is with making financial decisions.

4. Tax Factors

Implementing your strategy in a way that allows you to pass wealth to the next generations with few probate or taxation issues will require careful planning. A combination of methods may be utilized to direct more money toward gifts and inheritance and less toward taxes.

Professional direction will be important throughout each step of your wealth transfer, advising you on the best methods to accomplish your goals, giving you tools to communicate your wishes and manage different personalities and backgrounds of your family.

Are you ready to establish your legacy?

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on February 19, 2021 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.