Passing family values with inheritance
James Carter writes at BeaconNewsOnline that families need to consider passing on their family values as wells as finances. He says that while many families view leaving an inheritance as a final act of love passed from one generation to the next, a recent study shows only one-tenth of all families are able to pass an inheritance on to a third generation. That’s a sobering statistic.He suggests that it’s important to not only pass on your assets to family members, but also to pass on the values, knowledge, and tools your children and grandchildren will need to responsibly manage an inheritance. This calls for communication established early and repeated regularly in whatever manner is most comfortable for your family—formal or informal. That gives the next generation the time and luxury to learn and think about what the money means to them and how they plan to use it.
He also suggests making sure that your estate plan is up to date. As your family grows over the years and tax and other laws that affect your estate plan change, it’s important to work with your legal and financial advisors to keep all of your plans and paperwork current.
He recommends that If your own health and living expenses are taken care of, consider helping your family now. This is an especially wise move if your money will be subject to estate taxes—generally over $2 million.
We’ve worked hard to do this with our son and now with our DIL. We want them to understand how we’ve managed our finances, especially including the values that have driven our decisions. And we want them to understand the charitable decisions we make, both now and later. As they grow up and gain more financial experience, they’ll be equipped to manage whatever we are able to leave them, or even what we can share with them now. Makes more sense to me than hoping they figure it out after we’re gone!
Labels: adult children, inheritance
Sunday, October 15, 2006
Are You Counting on a Windfall Inheritance?
Over recent years, there’s been a lot of talk about the Baby Boomer generation inheriting a huge windfall. According to an article in the Insurance Journal in 2004, the 76 million boomers were predicted to inherit $40.6 trillion by 2052.However, according to several studies reported by New York Life, Boomers will inherit far less than predicted. There are several reasons for this:
Our parents are living longer and spending more of their resources on long term and medical care.
The recently poor economy has savings.
Baby Boomers have more siblings, meaning there are more people to spread the remaining wealth among.
We’ve certainly been experiencing the first reason. For years, I told my mom to not worry. They had enough to live comfortably for the rest of their lives. Then my step dad went into the nursing home and suddenly we were spending $2000 to $3000 per month over and above what their long-term care insurance paid. Watching the savings drain was like a loud sucking sound. Add to that CD rates of under 2% for a couple of years and the dollars disappeared quickly. We’ve been able to stem some of that drain by moving him to an excellent board and care home, but the concerns remain. He could return to nursing home care any day. And Mom could just as suddenly need care. Now we aren’t so sure how long their savings will last.
So even as we’re managing the needs and perhaps finances of our parents, we also need to be planning for our own retirement. We need to be faithful in contributing to our retirement accounts rather than counting on Social Security that probably won’t be there. And we need to consider long-term care insurance. The New York Life article suggests several important ways we can plan ahead responsibly.
It’s important that we do that so that we don’t burden our children—a generation that has far fewer workers than the Boomer generation.
Labels: Baby Boomers, finances, inheritance, nursing home costs