Don’t Be a Victim of Common Wealth Transfer Pitfalls

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Published by Taylor Financial Group

Successfully transferring your wealth to your kids or to the next generation is not as easy as you may think. Generational wealth transfers can actually be quite complicated, especially if they’re not planned properly. Have you thought about the “who, how, and when” of it all? There are many factors that can threaten the ability for your money to pass on to the next generation in a way you would be happy with. In particular, there are two main issues we want to highlight.

Generational Entitlement

By now, you’ve probably heard it said many times – millennials suffer from a sense of entitlement. But it’s really unfair to classify an entire generation in this way. The truth is that they don’t all suffer from an entitlement mentality, and I assure you that every generation before the millennials included plenty of entitled young adults too. So, let’s just get this stereotype out of our heads.

The problem we face lies in the way we’ve taught our children to deal with their money. As parents, we can often unintentionally “spoil” our children. Sure, we work hard to make money so that we can provide an abundant life for our family, and to build a great future for ourselves and our families. But, somewhere in that effort, we can lose track of the need to instill a sense of balance between privilege and financial discipline. That’s not a criticism. I understand full well how difficult it can be to convey the message to our children that building and managing wealth is complicated and requires effort, perseverance and commitment. It shouldn’t be taken for granted.

But, the reality is that millennials are poised to inherit approximately $41 trillion from their Baby Boomer parents over the next 40 years, making it the single largest intergenerational wealth transfer in human history. If you want your wealth to last for many generations to come, then you need to invest in teaching your children the importance of proper wealth management just as much as you invest in the stock market, if not more! You can download our Cross Generational Financial Planning Guide to learn more about the financial motivators of millennials, like student loans, daily expenses, and retirement, among others. And get the conversation started!

Family Ties

Another issue we have seen with some of our clients is the lack of financial connection they have with their children. Making sure the next generation understands what’s important to you is absolutely key to a successful wealth transfer. This requires consistent and clear communication. If your adult children have not been involved in your financial planning or legacy planning, we urge you to get them involved. Talk to them about your plans and the purpose behind your plans. Explain to them why your goals are important to you, and why you believe the overall mission should be carried on from generation to generation, even after you’re gone.

We often hold meetings with our clients and their children or grandchildren (or their parents or grandparents) to help facilitate good communication and make sure that there aren’t any concerns or unresolved issues that should be addressed. We have found these family meetings to be most helpful, and our clients have expressed relief in knowing that their goals are aligned with the next (or previous) generation’s.

Don’t let a lack of discipline or communication affect where your money goes. Let us know if you want to schedule a family meeting to review your financial plan and discuss how your wealth will transfer to the next generation.

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