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How to plan for your family’s upcoming wealth transfer

By Published On: September 7, 20223.9 min read

Christine Graham  | 

September 7, 2022  | 

Reading Time: 5 minutes

How to plan for your family’s upcoming wealth transfer

Family wealth transfer can be a difficult and at times uncomfortable conversation for many families but is an important one to have with yours. While women own and control more wealth now than ever before, it is imperative that every family member is included in financial decision-making and the investing process.

An Investment News‡ report on the ongoing wealth transfer found that people in their 50s will receive a significant amount of the money as their parents and grandparents pass down their inheritance. It is vital to have a communication plan in place for individuals in your family falling in this age range to ensure every member of your family is on the same page.

Introduce the subject of transferring wealth to your children and grandchildren

Money used to be a taboo topic—your great-grandparents and grandparents would never consider discussing with the next generation. However, times have changed—and so has the perspective on these conversations. People want to talk about finances while they’re still able to, so that they can leave a legacy they are proud of.

Many families are searching for an advisor for financial help in this everchanging economy and asking questions about wealth management and transfer. Creating a plan to talk about the transfer of money to the next generation and your wishes will help ensure a seamless transition. Discussing your strategies with beneficiaries ahead of time can also eliminate confusion, frustration and hurt feelings.

With money comes responsibility and expectations

Educating your beneficiaries on the responsibilities that come with inheriting wealth is necessary, especially if you would like your wealth to live beyond the next generation. As you formulate strategies to leave your hard-earned assets to loved ones, you may wish to structure a plan that provides financial security for not only your immediate heirs, but theirs as well.

Draw on your own experiences and knowledge to help educate your children to ensure they have strong financial fundamentals, which may include an understanding of the importance of giving back. Empowering the next generation will make you feel more confident in your plans and their impact.

Start the conversation early

Your children need to be old enough to understand the information, but you can begin talking with them about areas like philanthropy as early as grade school. For example, if your family makes an annual donation, you can involve your children in choosing recipients. Discuss causes that are important to them. Maybe they love pets or want to help give other kids presents for the holidays. Talk about it and let them help pick who you support.

As your children enter the high school years, you can work with your banker or financial advisor to help introduce fundamentals like budgeting and personal cash flow management. Then, as your children get older, talk with them about impact investing. Today, almost half of U.S. investors are showing an interest in sustainable investing‡.

If this is important to you and your family, teach your kids how to make informed decisions about how their money supports these causes, whether through investing or charitable giving.

Share the strategy

Wealth advisors, or financial planners, generally start the conversation with the older generation about how to share their estate planning details. This is one of the most significant services these advisors provide because they can assist in explaining the estate plan structure, and many times will facilitate the conversation about the strategy. Your children or grandchildren may have a lot of questions about the trusts and the strategy behind them, and an early conversation through an objective advisor can help avoid misunderstandings.

Whether to ensure strategic wealth disbursement or to enable your beneficiaries to mature before accessing funds, it’s important to make your estate planning decisions from a comprehensive planning standpoint. Intergenerational wealth transfer is a complicated process—it can be nuanced for different family members and emotions are always a factor.

Your wealth advisor can proactively counsel and assist in both building your strategy and communicating amongst generations. Having these conversations and plans in place can be the difference between just leaving a gift and establishing a legacy.

Visit our website to learn more about UMB Private Wealth Management.  Follow UMB‡ on LinkedIn to stay informed of the latest economic trends.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

By |2022-09-07T20:46:34-05:00September 7, 2022|Categories: Personal|Tags: , , , , , , |

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About the Author:

Christine Graham is executive vice president and chief fiduciary officer. She earned a Master of Laws (LLM) in Taxation from University of Missouri-Kansas City School of Law, a Juris Doctor from Washburn University School of Law, and a bachelor’s degree in journalism from the University of Kansas.
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