What I Think Heirs and Beneficiaries Should Know

What I Think Heirs and Beneficiaries Should Know

Sean Bryant   Tue, May 30, 2023   GoBankingRates

I Went Through a Generational Wealth Transfer: Here is What I Think Heirs and Beneficiaries Should Know

It’s expected that over the next two decades, roughly $84 billion will be transferred from Boomers to Gen Xers and Millennials. This generational wealth transfer will be one of the biggest ever.

This leaves both heirs and beneficiaries with the important task of understanding how to approach this great transfer of wealth. How do you balance leaving enough for your loved ones with gifting to causes that are important to you? Within this article, we’ll dig into everything you need to know to prepare yourself for the great wealth transfer.

1. Transparency Is Important

Most families hate talking about money. Many will do whatever it takes to avoid the topic altogether. However, when it comes to planning for the future, parents and children need to have these tough discussions.

According to an Ameriprise Financial Money and Family study, only 19% of people are transparent with their families about finances. To have a successful transfer of wealth, it’s important to discuss what the family’s finances look like and what the plan is going to be.

Will money be distributed equally between beneficiaries? Will anything be transferred to charitable organizations? Are there any requests from parents on how the money should be used or invested? These are all questions that should be discussed ahead and time to avoid potential conflicts down the road.

2. Understand Tax Implications

Depending on your relationship and the state where you live, you could be on the hook for an inheritance tax. This is slightly different than an estate tax because the beneficiary is responsible. Currently, there are only six states that impose an inheritance tax and that will be reduced on January 1, 2025, when Iowa eliminates the tax.

It’s also important to understand the tax implications you might have if you inherit assets other than cash.

“If you receive property as part of your inheritance, such as a house or land, be aware of potential property taxes,” says Michael Ryan, former financial planner and founder of Michael Ryan Money. “The value of the property may increase your annual property tax obligations, and you might need to budget accordingly.”

The same is going to be true with other investments.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/went-generational-wealth-transfer-think-155345333.html