Preparing the Next Generation to Inherit Wealth

estate planning

Estate planning is an important part of retirement planning for many reasons: You’ve worked hard for your money and want to see it passed down in the most efficient way possible for your loved one’s benefit. Unfortunately, costly mistakes are all too easy to make. Without careful planning and discussion, you could end up passing on a larger tax burden and leaving heirs uncertain about what to do. It’s important to discuss how you plan to transfer your wealth with your trusted financial professional and your loved ones when preparing the next generation to inherit wealth.

Create or Review Your Estate Plan

It’s important to regularly review your estate plan and update it when there are major life changes like the birth of a new beneficiary, marriage, divorce, or when beneficiaries become eligible to receive money. Many people may not know that their will does not control who inherits all of their assets, such as retirement accounts, life insurance, and annuities. In order to pass these on, you must name a beneficiary for each retirement account, insurance policy, and annuity.

Consider Tax Minimization Strategies

You’re likely thinking about tax minimization in 2020 and beyond for yourself, but what about your heirs? Some of the same strategies could also potentially help minimize their tax burdens. Talking with your loved ones about how inheriting money could affect their taxes is one way to start the conversation about wealth transfer. You may have the option to convert funds from a traditional IRA, 401(k), or similar qualified retirement account into a Roth IRA. In this case, you would pay tax on the funds converted and then be able to withdraw them tax-free later on.[1] Consider that the Tax Cuts and Jobs Act lowered tax rates and will expire at the end of 2025.

Discuss What Heirs Plan To Do With Money

Communication is crucial when preparing heirs to inherit wealth, and this includes discussing what they plan to do with money and how they can handle it responsibly. A “DIY” or “do it yourself” mentality has spread from the realm of home improvement to finance. And while it’s good for younger generations to educate themselves on their finances, they may run into trouble when investing on their own. Online stock trading platforms have become popular,[2] and younger users may only see the upsides to day trading on their own and fail to understand the complexities of investing, such as diversification and rebalancing. There is also likely a fair amount about our complex tax code they don’t fully understand.

When preparing the next generation to inherit wealth, neither you nor your heirs need to go the DIY route. We’re trusted financial professionals who can help you create a comprehensive retirement plan where your retirement income plan, tax minimization strategy, and estate plan all work together. Get in touch with us to find out how we can help you create a financial plan for your retirement and the future.



The commentary on this blog reflects the personal opinions, viewpoints and analyses of BML Wealth Management’s employees providing such comments, and should not be regarded as a description of advisory services provided by Cooper Financial Group. The views reflected in the commentary are subject to change at any time without notice. Nothing on this blog constitutes investment advice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future returns.

Investment Advisory services are offered through Cooper Financial Group, an SEC Registered Investment Advisory firm. All Insurance Services are offered through BML Wealth & Insurance Services. California Insurance License #0M15550. BML Wealth Management & Cooper Financial Group are not affiliated.

We do not provide tax or legal advice, all individuals are encouraged to seek guidance from qualified professionals regarding their personal situation. Any references to protection benefits or steady and reliable income streams in this guide refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured. Indices mentioned are unmanaged and cannot be invested into directly.

Ready to take
The Next Step?

Schedule Your Retirement Fingerprint® Review

A Complimentary 15 Minute Call