The Greatest Wealth Transfer in History is Upon Us: Are Boomers Doing it Right?

According to research conducted by the financial market intelligence firm, Cerulli and Associates, Baby Boomers and the Silent Generation will pass down a whopping $84 trillion in assets between now and 2045, $72.6 trillion of which will pass directly to heirs. Which begs the question, how should Boomers be leaving what some are calling the “greatest transfer of wealth in history” to their heirs? 

The answer? Trusts, which are an ideal vehicle to pass on the wealth you’ve worked hard to build over the course of your life. 

An experienced estate planning attorney can prepare a trust that can greatly reduce, if not eliminate, estate tax exposure. For example, a trust can be structured to direct a certain portion of your estate to a Credit Shelter Trust; when you pass, your spouse will have the use and benefit of the funds in the trust and, if properly drafted, the assets in the trust will avoid estate taxation even when passed to your children (or other beneficiaries) when your spouse passes away. For high net-worth families, there are any number of trusts that can be used to reduce or eliminate estate taxes, from Qualified Personal Residence Trusts, to Spousal Lifetime Access Trusts, to various charitable trusts with lifetime benefits for you or benefits for your heirs. 

In addition to estate tax planning, trusts can be a great tool to protect your beneficiaries and the assets you have left them from today’s realities and/or the unexpected. For example, assets can be held in a trust for your adult child and that same child can be their own trustee; the benefit is that those assets cannot be co-mingled with other assets and therefore will not be subject to a divorce distribution or settlement. Alternatively, you can leave your estate assets in a trust and appoint a dependable individual to manage the trust assets for your beneficiary. The Trustee will make distributions at the Trustee’s discretion. As the beneficiary does not have direct access, the trust assets will be protected should a drug or gambling problem arise, or if there are creditor claims.

Finally, irrevocable trusts can be used to protect assets for the purposes of Medicaid planning. Given the exorbitant costs of long-term care, an extended stay at a nursing home can significantly deplete an estate. However, by properly and timely establishing an irrevocable trust with an experienced elder law attorney, you can preserve the value of your estate in the event you require nursing home care, home care, or care in an assisted living, thereby keeping your care options open and preserving your assets for your loved ones.  

As always, consult with the knowledgeable and experienced Long Island estate planning attorneys at Cona Elder Law to determine which trusts are right for you and your estate plan. Our attorneys are always available.