Bridging the Gap: Transgenerational Wealth Planning

Transgenerational planning is a holistic approach to moving your financial assets, real estate and personal property from today to future heirs: not just your children, but your grandchildren and their heirs. It’s estate planning done with multiple generations in mind.

In this video, we present a broad overview of available strategies and encourage you to reach out to your TAG advisor to help create a plan specific to your personal situation.

Why Should You Plan Ahead?

First, there are a few reasons why it makes sense to plan ahead. Advance planning allows you to:

• Protect your assets: Make sure no unintended recipients – such as the tax man or an estranged in-law – get their hands on your assets.
• Maintain your current standard of living: It allows you to maintain your current lifestyle, while still providing for future generations.
• Create a family legacy: You’re fortunate to have created enough wealth to pass on to your heirs – whether it’s your children or your grandchildren and their heirs.
• Choose who will handle your affairs: Rather than letting them fall into random hands.
• Facilitate the transfer of assets: Which becomes much faster and easier if you’ve planned everything in advance. Your heirs have enough to deal with during their time of grief and will be grateful for your forethought.

The Most Common Situation

Many people have all of their assets in their own name, which effectively means that all of their assets are in one bucket. This bucket is vulnerable and everything in it is subject to things like:

• Probate, which can delay the distribution of your estate.
• Estate taxes, which will diminish the value of your estate.
• Divorce – be it yours or your heirs – which could leave a portion of your legacy to an unintended recipient.
• Family disharmony is, unfortunately, more common than one would like to think and can lead to prolonged legal wrangling.
• Other creditors, who will have access to all of your assets.
• College financial aid; it could even affect how much college financial aid your child or grandchild is eligible to receive.

Safeguarding Your Assets for Future Generations

Rather than holding everything in one open bucket, consider the following 3 options to safeguard your assets for future generations. Clients often choose one or more of these three options:

1. A revocable trust.
2. An irrevocable trust.
3. A real estate trust.

Option #1: A Revocable Trust

A Revocable Trust is a separate legal entity that allows you to retitle your assets in the name of the trust while giving you the freedom to change the terms of the trust at any time. A Revocable Trust allows you to:

• Avoid probate, which could provide a savings of up to 4% of your estate.
• Maintain control of your assets and direct where and how your assets are transferred.
• Protects you in case of incapacity, since your chosen trustee will be able to handle your affairs.
• Preserves the privacy of your estate, keeping it out of the public record.

While using a revocable trust offers more protection than the open bucket, it is still accessible by creditors and does not avoid estate taxes.

Option #2: An Irrevocable Trust

An Irrevocable Trust provides as much protection as possible, but also means that you give up control of your assets since they are, in fact, now owned by the trust and are removed from your estate. While this may sound limiting, consider the many benefits:

An irrevocable trust provides all of the benefits of a revocable trust, PLUS:

• Shelters your assets from creditors – yours and those of your beneficiaries.
• Protects your assets from estate taxes, saving more for your heirs.
• Protects your assets from divorcing spouses (yours or your those of your heirs).
• Gives you complete control over where and to whom your assets are bequeathed.

Keep in mind, it is possible to put only a portion of your estate into an irrevocable trust, while keeping some assets more flexible.

Option #3: A Real Estate Trust

If you have real estate assets other than your primary residence, consider putting them into a Real Estate Trust which will give you the same protections as an Irrevocable Trust, while helping to maintain family harmony. We’ve seen too often a treasured summer home become an albatross for future generations, rather than an asset to be enjoyed by all. A realty trust:

• Preserves privacy by providing anonymity for owners.
• Ensures the smooth transfer of ownership interests.
• Provides one point of contact so there’s no need to involve multiple people in multiple locations.
• Avoids the time consuming, expensive probate process.

Which Option is Right For You?

A revocable trust? A realty trust? An irrevocable trust? Talk to an expert to determine the best option for you and let us help your family get through one of the worst times of their lives without added stress.

Tag 2.0 Can Help!

Work with your TAG 2.0 advisor now to:

• Help broker family meetings to ensure no future surprises and maintain family harmony.
• Transfer your assets to an appropriate trust.
• Work with your attorney or refer you to an attorney in our trusted network.

Contact TAG 2.0 now to see how we can help you prepare for an efficient transfer of your assets. Learn more at www.TrustAdvisoryGroup.com or call John Cadigan at 781-933-6100.