Waiting to Inherit, Baby Boomers' Estate Planning
I thought this article was particularly interesting. It discusses the prevalence of the mindset of many Baby Boomers, considered a "spending" generation, living beyond their means in anticipation of inheriting substantial amounts from their "saver" parents, thus taking care of any potential financial woes. They are waiting to become heirs, because an actual heir is not determined until the time when a person dies. Prior to that, they are considered an heir apparent. But the potential payouts aren't as straightforward as they seem.
According to the article, despite the recession, more than $20 trillion will be transferred to heirs in the next 50 years — the largest transfer of wealth in U.S. history, according to the Center on Wealth and Philanthropy at Boston College.
Baby boomers may be dealing with having to cover college tuition bills, while simultaneously having to pay for the care of an aging parent. Many are also losing their jobs at a time when they are near retirement, which may thus put a strain on any retirement savings or home equity in order to sustain their day to day lives.
Additionally, the segment of population aged 85 to 94 has increased by 30% over the past decade due to health care and other advances. While the longevity is encouraging, half of the people over the age of 85 also suffer from Alzheimer's, meaning that they need around the clock care. The type of care that is not covered by medicare or retirement plans, only through long-term health insurance.
There is also the potential issue of children who decide to care for their parents feeling entitled to greater share of the estate than other siblings, yet parents still more likely to leave equal shares to all children.
Also, in these times of "modern" families, marriage and divorces leading to blended relations has the potential to create a law school professor's hypothetical dream. For example:
Paula Goldie, 57, is a typical Baby Boomer who celebrated her 50th by taking up scuba diving. She plans to learn the rumba for her 60th. Goldie's married and has a 40-year-old stepdaughter, a 25-year-old daughter and 20-year-old granddaughter. Her mother died 16 years ago, but her father, 82, remarried. His wife, 67, has four adult children.
Having a solid Estate Plan in place is key to avoiding the nightmarish issues that these complicated modern estates can pose. I wouldn't want to dream of the potential conflicts that might arise after a loved one's death due to the sheer fact that so many different people and personalities are involved.
An Estate Planning Attorney can help you think through what sort of estate plan you'd like to create, incorporating language that will help your family to understand why you made the decisions you did, putting framework into place that will pass through Probate easily, or even avoid it altogether.
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