The fact that baby boomers in the US are expected to transfer an estimated 30 Trillion (yes, with a “T”) in assets to their heirs over next 30 to 40 years, calls for planning. We know between 2031 to 2045, 10% of the total wealth in the US will change ownership every five years. That is a major reason for inheritors to be concerned.
Let us take a moment and analyze why most of us hesitate to plan:
1. Plans are written in stone
2. Wait for that perfect time
Plans can be structured to be flexible, and to change as life changes.
There is no such thing as the perfect time, the only time is now.
A good plan is one that is structured and implemented based on a family’s financial picture and flexible enough to incorporate changes as they arise. It always starts with taking an inventory of assets, liabilities, and family’s future plans, both personal and business.
Many high net worth individuals do not plan until they feel that their heirs are prepared to handle the family fortune. However, there is never a time when the heirs are fully prepared to manage the wealth and its growth, until they take the full reigns.
Its’ also a fact, that many wealthy families start sharing the financial picture with their heirs when they are young, but old enough to understand money and money matters. Wealthy families make money management a family culture; encouraging family members to be a part of the decision process, sharing successes and mistakes as a learning tool, while emphasizing family values, philosophy, and goals. Successful families not only teach their heirs how to do a better job in managing their money but also how to use a portion of it to benefit society.
A study of high net worth individuals show that 75% of heirs feel that they have fairly high interest in wealth management but only 50% feel they are capable of wealth preservation with smart money management. In summary talk to your heirs/beneficiaries and plan now even if it does not look like the perfect plan.