Baby boomers are more concerned with funding their retirements than leaving financial inheritances to their families and charities. While this may have been initially driven by the Recession, remember that this generation re-defined everything from music to social mores. The boomers are at it again: redefining what it means to leave a legacy after they are gone.
However, money isn’t the only definition of legacy, according to the US News article titled “How Boomers Are Redefining 'Legacy.'” Baby boomers realize that their top priority is to have enough assets to support themselves, but are starting to redefine “legacy” in the process. For some individuals, it means giving away some money now. For others, it’s restructuring some assets to leave a financial inheritance. For most, the process of aligning their assets with their priorities means the opportunity to create non-financial legacies.
Rethink how you label the financial help you're giving now to your next generation. Are you helping them out with college tuition? Helping with the living expenses of a slow-to-launch millennial by having them stay at home or by covering some bills is not uncommon. About 62% of Americans 50 and older are providing financial support to family members, according to a recent study. The study found that the subsidies averaged $15,000 over five years, but also increased with the givers’ resources. You’re allowed to give away $14,000 per recipient, per year, without triggering any tax penalties or disclosures … more than that and the person who gives has to complete a gift tax return. Also, the gift tax is deducted from your lifetime cap on tax-free gifting.
A 529 college saving plan lets grandparents build up provisions for a grandchild’s college education. Another way to redefine “legacy” is to set up your assets to guarantee that your heirs receive at least some type of asset. Be sure to distinguish legacy planning from estate planning, the article says. For instance, some families construct a legacy of memories and real estate by purchasing a vacation property held in a trust and owned equally by all heirs, keeping it intact for at least another generation. It also guarantees that the vacation home won’t automatically be sold as part of the estate.
Baby boomers: it’s really stories and family values children want from their parents—that’s what Boomers say they want from their aging parents. It’s likely that Generation X and millennials will want the same. Discussions about heirlooms with some market value but even greater sentimental attachment, like grandma’s gold wedding band, are great openings for conversations about “values that characterize the family.”
The article also suggests legacy letters that convey your own priorities, point of view, and life lessons for future generations. This gives you the chance to talk about the document. It’s a good way to redefine “legacy.” For more information, please visit our website www.estateandprobatelawyersmi.com