There's a lot of money about to change hands in the U.S. — $30 trillion to be exact.
Baby boomers are the wealthiest generation in American history — and they're about to pass down those riches over the next few decades. It's the so-called great wealth transfer. But that exchange might not be as large as you had hoped if you don't take the right estate-planning steps.
Ensure there's still some wealth to pass downMake sure that inheritance you're poised to bequeath remains intact. Health-care costs can add up fast. The cost of long-term care can wipe out an entire potential estate in the space of just a few years. The premiums can be hefty, but some financial advisors say long-term care insurance is worth it.
Death & taxesMost estates are not actually subject to federal estate tax, because the exemption is pretty high. But check the rules in your state. Some have much lower estate-tax thresholds.
Set up a trustIf you want to put some conditions on how your bequest is spent, try a trust. Trusts can dictate exactly when assets pass to beneficiaries, or how it should be spent. For example, you can stipulate expenses be tied to education, or health care. Another plus: Trusts can minimize estate taxes and keep your estate out of probate court.
Consider a living trustKeep in mind, the probate court process can prove to be time-consuming and expensive, which ultimately just chips away at your estate. Another way to avoid it is to supplement the will with something called a “living trust.” It holds the majority of your assets while you’re still alive (so you can maintain control) and then transfers it to your beneficiaries after you die.
Avoiding probate also keeps your wishes private. Probate is public, which means everyone knows your business.
So take care with that legacy planning now, and your heirs will be well in the black later on.
