The Basics of Generational Wealth Transfer: What You Need to Know
As families assess the future, many consider generational wealth transfer as a part of their financial plan. Generational wealth transfer involves assets passed from one generation to the next. Understanding the importance of generational wealth transfer can help you leave a legacy that can provide a stronger financial foundation for your children and grandchildren.
What is Generational Wealth?
Generational wealth is assets passes from one generation to the next, including:
· Cash savings and investment accounts
· Real estate and family businesses
· Retirement accounts and pensions
· Life insurance proceeds
· Heirlooms and other valuable property
Transferring wealth is more than just passing on money. It is about preserving values and providing opportunities for future generations.
The Importance of Planning Ahead
Having a well-thought-out strategy for the wealth transfer process helps ensure assets are being distributed according to your wishes, heirs are prepared to manage what they inherit, taxes and expenses are minimized, and your legacy is preserved.
The Key Elements of a Wealth Transfer Plan
Will and Estate Plan
Having a properly drafted will is essential to your generational wealth transfer plan. Having proper documentation in place clarifies your intentions and helps loved ones avoid probate and other complications.
Beneficiary Designations
Ensure that retirement accounts, life insurance policies, and other financial instruments have up-to-date beneficiary designations.
Tax Planning
Understanding how the federal estate tax exemption applies to your estate is a key aspect of your planning. Your financial advisor and estate attorney can be helpful in this regard.
Family Communication
Communication is among the most important aspects of wealth transfer. Discussing plans and values with your heirs allows you to make your intentions known and prepares the next generation for the responsibly of managing wealth.
Working With Professionals
Because wealth transfer can be complicated, it might require you to involve others along with your financial advisor. Together, your financial advisor, an estate planning attorney, and a tax professional can create a customized plan that aligns with your unique financial situation.
The material has been gathered from sources believed to be reliable, however West Michigan Advisors cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through West Michigan Advisors. Advisory services are only offered where West Michigan Advisors and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. Securities offered through Level Four Financial, LLC, a registered broker dealer and Member of FINRA/SIPC