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An estimated $105 trillion in assets will pass down from Baby Boomers and the Silent Generation to heirs through 2048. But transferring assets is only part of this Great Wealth Transfer. The goal is to make sure the wealth you’ve built ultimately reaches the people and purposes you intended in the most tax-efficient way.

In this episode of Money Wisdom, Nicholas J. Colantuono, CFP® and Eric Hogarth, CFP® explore why it’s important to have a plan before passing down an inheritance.

Why This Transfer Is Happening

Baby Boomers account for a large share of the country’s wealth. As that generation ages, those assets naturally change hands. From a tax and estate planning standpoint, many retirees have not fully prepared for this transfer. Proactive planning versus having no plan at all can make a significant difference in the wealth you pass on to future generations.

Strategies like trust planning can help protect the people that you love from potentially their own poor decisions or outside circumstances. Even though it can be difficult, having these conversations early is crucial. After all, nobody knows your financial values and legacy goals better than you do.

Ready to outline your wishes with an estate plan? Get your free copy of The Greatest Gift guide by texting “GIFT” to 800-757-0436.

Major Implications for Multiple Generations

This shift requires careful planning by both those leaving an inheritance and those receiving one. But about 68% of parents aged 55 or older have not told their children about their inheritance or if they will even receive one.

This can be concerning, especially if your heirs may be financially on the hook for certain things later in life. With professional guidance, it may be easier to begin these conversations. Ultimately, it’s important not to leave these things unsaid or unplanned.

Importance of Having a Plan

Taxes can play a major role in how you spend money and how you gift money in retirement. Some tax planning considerations include understanding the rules around inherited IRAs. Your heirs may have to withdraw those funds within 10 years, which could create real tax consequences.

From an estate planning perspective, without the right documents, strangers could make choices for your family after you die. Additionally, if your beneficiary forms are outdated, those designations can override your estate plan. By working with a professional, you can help ensure your assets pass to your heirs in the manner you wish.