Transferring Wealth to the Next Generation

[Doughknob]

The adventure of life itself is finding one’s way. I am glad of 2 things: I had to make my own wealth, and I did it. It was fun the whole way.

I leave my kids a great start in an investment account. Then it is up to them to build on it and do the same for their kids.

The rest I will use up before I go, by trying to help others….

 

[Torvy]

The rest I will use up before I go, by trying to help others….

I'll send you a PM with wife's Venmo.

 

[KennyG]

Your best plan depends on a lot of variables. How large your total estate will likely be. How stable and dependable your kids are. How you think Congress may mess around with the Estate Tax over the next decade or two.

My assets are fairly large and I think it's likely the Estate Tax exemption will be reduced in my lifetime, so I transfer the max under the Gift Tax exemption to my kids every year. They are very responsible with money. Other than that, I don't look for more exotic ways to transfer wealth.

An attorney or financial planner may be helpful. However, if you talk to someone and they begin mentioning insurance annuities, run the other way as fast as you can.

 

[2manyrocks]

What is the best way to transfer wealth to the next generation?

My parents came from nothing, both lost their fathers at a very young age and grew up rough. Worked hard all their lives and left a respectable estate worth more than they would have ever believed. My in-laws did the same. F-I-L passed last yeas as did my mother. Now we sit here waiting for the final settlements and I wonder what is the best move I could make to ensure my grands do not struggle. We do not live extravagantly, don't spend a lot of money or party. We do plan on traveling a bit. Daughters and their spouses are hard working and successful. Wife and I are a big part of our grand's lives and are instructing and training them.

What is the best step to take?

RSKY

There's a saying. "Do your giving while you're living then you know where it's going." If you start off with smaller gifts, but don't like how your gifts get used, then you still have the option of making adjustments to your future giving.

Also consider the unique interests and abilities of each grand. You don't have to give each one the exact same thing. If they are different ages, one might need help with college. Another might need help with paying for a home. You have to consider their individual needs.

Given Powell's speech at Jackson Hole economic summit yesterday, tightening is going to happen. Preserving asset values against inflation and loss is also something else to consider.

 

[RSKY]

An attorney or financial planner may be helpful. However, if you talk to someone and they begin mentioning insurance annuities, run the other way as fast as you can.

Ten years ago I retired and rolled my 401K into an IRA to have better control of it. The lady I dealt with at the 'large financial company' I use went into a sales pitch on annuities. I could tell she was not enthusiastic about them and told her I needed to think about it for a week. When she called me back and I told her I didn't want the annuities she was relieved. Said that part of her job was selling them but she hated it and explained to me why they were a bad choice. I told her if she had to try and sell me anything in the future that was a bad deal just to clear her throat a lot while making her sales pitch. She did me very good over the next ten years or so. Gave me great advice,...most of the time. Had a few hiccups. Then she got promoted.

 

[Shenandoah MF1760]

If you start off with smaller gifts, but don't like how your gifts get used, then you still have the option of making adjustments to your future giving.

This is good advice. My stepfather gave each of my boys $11K and no amount of advice on my part kept the younger 3 from burning through that money.

The biggest problem is that you're dealing with a moving target. You need someone that keeps up on the current laws.

Attornies are like mechanics, some good some bad. I had an excellent real estate attorney prevent me from getting involved with a 40-acre nightmare. Talk around, find people that have used estate attorneys that they're not related to and get their opinions.

Time is not your friend. I believe most strategies need to be in place for 5 years or they aren't recognized. i.e. you can't put your child as a co-owner of your property as you're dying and expect to avoid probate. These 5 years could easily be moved by congress to further out.

The internet is a good place to find subjects to question your professionals, they'll know grain from the chaff.

If you find a professional you trust, and don't listen to them - then why do you have them?

 

[RSKY]

Made some decisions last night. I hope y'all will read this over and tell me what I am doing wrong or if I am making a mistake.

Most of the wealth transferred to my sisters and me was in land consisting of two farms. We sold the first at auction a month or so ago and two guys got in a bidding war. We got twice as much as we would have if we had put it is real estate. The second farm sells in a month and the location is nowhere as good. I doubt if it goes very high.

I hate to sell the family farms but all three of us are retired, I'd the youngest at 68. None have any use for the land.

We live in Kentucky and the estate is not large enough to trigger inheritance taxes. Some of it is in CDs I bought for mom (with her money) with POD (pay on death) in her grandkids and great grandkids names. All three of us are boosting the amount our children get in their inheritance from their grandmother. I intend to ladder CDs (thru Fidelity Financial) in my daughters names with a couple or three thousand dollars coming out every three months. This will give both of them emergency money if they ever need it. Once again all four, that is daughters and son in laws, work. They are not struggling and I doubt if the money will ever be touched. But it will be there if they need it.

I have started investment accounts for all four of my grands. They are actually in my and my wife's names but go to them at our deaths. I will control what mutual funds are in these accounts and keep an eye on them from now on. I may also start an investment account for the daughters. Even though they both have 401Ks that have done very well over the years. Neither of them will know about these accounts until our deaths. I figure that over the twenty or so years I have left that these can grow substantially.

RSKY

 

[check]

My dad made it really easy for us. He was broke when he died. He had actually given us what spare cash he could quite a while earlier, before he died.

And we only have one kid, so that makes it easier as well.

Plus, my best friend specializes in estate law so we are pretty much covered.

 

[RSKY]

Your best plan depends on a lot of variables. How large your total estate will likely be. How stable and dependable your kids are.

Very stable with good jobs and hard working. Took daughters to a financial advisor at a local bank when they were 14 and 10. Nobody had laptop computers then but this lady pulled out a laptop and went thru her entire sales pitch on investing in stocks and mutual funds with the girls. I sat in the back and listened as they asked questions. She spent more than an hour with them and I bought them in to a conservative mutual fund with their money. That lady made a lasting impression on my daughters as to how to handle money for the long run.

A few months later the oldest was a freshman at the local high school and a teacher made some kind of statement in class that she disagreed with. She told him, "that is not what my broker told me!" and explained what she had been told. Teacher's reply was, "YOU have a broker". She might have had $1200 in her fund.

RSKY

 

[RSKY]

There's a saying. "Do your giving while you're living then you know where it's going." If you start off with smaller gifts, but don't like how your gifts get used, then you still have the option of making adjustments to your future giving.

Also consider the unique interests and abilities of each grand. You don't have to give each one the exact same thing. If they are different ages, one might need help with college. Another might need help with paying for a home. You have to consider their individual needs.

I agree. And I would like to be here to see them enjoy their inheritance. BUT I also want them to grow it and pass it on to the next generation and so on. THAT is what I am concerned about.

I also want to watch them enjoy things.

We have taken the oldest three grands to Disney World after they turned four but before five years of age. Haven't been able to do that with the youngest due to COVID. But heck, at five years old he has already been there twice and to Disney Land in California twice. Plus Universal Studios, Yellowstone and Yosemite Parks. So I am planning on taking the whole bunch to the Orlando area next summer. Will spend a week going to SeaWorld, Aquatica, and swimming with a dolphin at Discovery Cove. Gonna avoid Disney and Universal this time. Wife and I will tag along and be able to watch them have a great time. The four cousins get along very well with the occasional fuss that doesn't last very long. Started a few years ago taking vacations and bringing one or the other daughters and their families with us. Give them a stress free break. Gonna expand that a little until we are unable to travel due to age.

RSKY