One of the things a person’s death will generally lead to is a transfer of wealth. Specifically, this is the transfer of wealth from the person’s estate to their beneficiaries, whoever they happen to be.
Research indicates that, with the baby boomers getting older, we are nearing a time period that will see a lot of transfers of wealth. This research estimates that around $30 trillion will be transferred from baby boomers to their beneficiaries during the course of the next few decades. It further predicted that the country will be seeing as much as 10 percent of its overall wealth being transferred every five years over the period going from 2031 to 2045.
What will be controlling where all this transferred wealth will go? It depends on what baby boomers do when it comes to estate planning.
When a person has no estate plan, state intestacy laws will typically dictate what happens with their wealth. There are many reasons why a person might not want the transfer of their wealth being controlled by such laws. For one, these laws may lead to their wealth going a very different place than they would want. Second, these laws are rather inflexible in their application and thus are not really built to handle diverse circumstances, and could leave many important goals a person had unaddressed.
On the other hand, if a person does engage in estate planning, it is their estate planning documents that will generally control what happens with the transfer of their wealth. Now, what kinds of transfers they can do and what goals they are best suited to address vary greatly among the various types of estate planning devices, like wills, trusts and assets passed by beneficiary designations. So, when a person wants to take control of what will happen with their wealth when they are gone, they may want to have a detailed discussion with a skilled attorney on their wealth transfer goals and how to set up an estate plan aimed towards these goals.
Source: The Washington Post, “Think now about what you will leave behind,” Michelle Singletary, Oct. 8, 2016