How to Prepare for the Great Generational Wealth Transfer

An estimated $84 trillion in wealth is expected to transfer from the Baby Boomer generation to their children and grandchildren over the next couple of decades. It’s a staggering amount that represents one of the greatest intergenerational wealth transfers in history.

While inheriting wealth can be a wonderful opportunity, it also comes with great responsibility. Without careful planning and strategy, much of that $84 trillion could evaporate due to taxes, poor money management, or lack of preparation. That’s why, at Hammond Law Group, we believe it’s crucial for both the transferors and recipients to get their affairs in order well before this massive wealth transfer occurs.

In this guide, we’ll walk you through key strategies to prepare for an efficient, tax-optimized transfer of generational wealth. By being proactive, you can ensure your family’s hard-earned assets are preserved, and your legacy is passed down according to your wishes.

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Review and Align Your Assets

Before any wealth can be efficiently transferred, you first need to take a comprehensive inventory of all your assets and accounts.

This includes:

• Investment and retirement portfolios
• Real estate holdings
• Business interests
• Valuable collectibles
• Insurance policies, and more

We often find our clients have assets scattered across multiple institutions that need consolidation.

During this review process, we’ll update beneficiary designations, revise ownership titles, and assess your estate’s overall liquidity position. You don’t want your heirs stuck paying estate taxes out of pocket while they wait for illiquid assets like real estate or businesses to be sold. Proper liquidity and cash flow planning is essential.

We’ll also conduct a thorough audit of any existing life insurance policies and advocate for adjustments where needed. Life insurance can serve the dual purposes of providing a tax-free pool of cash to pay estate taxes while also leaving a lasting inheritance.

Create an Estate Plan That Preserves Generational Wealth

The foundation of any solid wealth transfer strategy starts with an updated, comprehensive estate plan.

At a minimum, you’ll want an up-to-date will, trust, and power of attorney document.

1. A will outlines how you want your assets distributed after you’re gone. However, a will alone may not be enough, especially for larger estates, since it does not provide asset protection.
2. By funding a trust with your assets, your estate can avoid the costly and time-consuming probate process after you pass away. Your beneficiaries receive their inheritance much more quickly and privately.
3. A durable power of attorney designates someone you trust to make financial and health care decisions for you if you become incapacitated.

Depending on the size and complexity of the assets of your estate, you may need to leverage different types of estate planning tools and strategies.

At Hammond Law Group, we work with you to implement safeguards that keep your assets in your family’s hands and prevent wasteful spending by heirs.

Our attorneys are well-versed in tools like spendthrift trusts that allow you to stipulate how and when your wealth is distributed. This ensures your legacy lives on exactly as you envisioned while providing protection against creditors, divorces, or ill-advised money management. We’ll be your partner in securing your family’s financial future for generations to come.

Implement Tax-Efficient Wealth Transfer Strategies

Taxes are one of the biggest threats to preserving generational wealth. The federal government imposes a 40% estate tax on assets exceeding $13.61 million for an individual or $27.22 million for a married couple. On top of that, many states also levy their own inheritance or estate taxes which can further erode your wealth.

The good news is that with careful tax planning, you can significantly reduce or even eliminate your estate tax burden through strategies like:

• Using your lifetime gift tax exemption through annual exclusions of up to $18,000 per recipient, per year.
• Setting up irrevocable trusts like IDGTs, GRATs, or SLATs.
• Creating Charitable Remainder Trusts.
• Using Family Limited Partnerships and valuation discounts.

Tools for Productive Family Wealth Discussions

Speaking of family dynamics, it’s critical to get your loved ones involved early.

The goal is to align expectations, share your wishes, and educate the next generation about financial literacy.

For more complex scenarios, we may recommend a family office for governance and professional oversight.

Wealth Management for Beneficiaries

The wealth transfer process continues even after assets are passed on. We collaborate with advisors to ensure beneficiaries have structured investment plans, trusts, and proper risk management.

Transfer Wealth Seamlessly With Hammond Law Group

The great transfer of generational wealth is coming—are you prepared?

If you’re concerned about transitioning your assets in a tax-efficient manner and preserving your legacy, we encourage you to contact Hammond Law Group today.