Transferring Wealth to Your Millennial or Gen Z Children

People with Millennial and Gen Z children have been in the workforce for a minimum of 20 years— many are already retired. If you have children who fall into this category, you know it’s been a wild ride. You’ve raised your family through a massive shift in technology and culture, airport security isn’t what it was before you had kids, and you experienced a global pandemic.

You have worked hard and built a life over the years. You’ve put your children through school, and they are either in the college years or have launched as adults who are in the workforce now.

You did it! It was hard work. But you did it. And while you were doing that, you also built a nest egg. You have a home, a solid portfolio, and maybe even secondary properties for income or pleasure. The way we say it in the estate planning world is: you’ve built wealth. We know that may not feel like it fits, or maybe it even feels cringy, but it is true. The combination of all of your assets is wealth.

The question now becomes: how do you maintain this wealth once you’ve built it? How do you pass it down to your children and grandchildren?

Maybe you were gifted a valuable asset or inheritance in your earlier years, and you know what a boost that was to you as you were coming up. Maybe an inheritance was the thing that made it possible for you to buy your first home and you want to offer that kind of support to your child or grandchild. With a bit of good planning, you can!

So, how do you transfer your wealth to your Millennial or Gen Z children so they can get the benefit of a boost as they are coming up?

Types of Distribution

First, it’s important to determine when you want these assets to transfer to your children. Perhaps you want them to receive them immediately upon your death. Or maybe you want them to disburse slowly over the course of years or decades after your death. Or perhaps it’s a gift you want to transfer while you are alive. All offer great benefits and all have drawbacks. We’ll highlight each below.

Gifts Given While You Are Alive

The most amazing thing about giving a gift while you’re alive is that you get to watch your child or grandchild enjoy that gift! You get to see the look on their face when you give it to them. You get to watch them use the gift. It’s amazing! For instance, you have an antique car that you love. And your child loves it too– you’ve worked on it together over the years. And your intent is to gift it to them as part of their inheritance. But instead of waiting until you die, you hand them the keys and sign over the title on a random Sunday after brunch. You get to see that joy on their face and you get to see them pull into your drive in it every time they visit. That is something you don’t get if the gift transfers after your death.

Another perk is that making gifts now takes the value of that gift out of your estate. So if you’re trying to limit estate tax after your death, gifting assets now can help limit those estate taxes.

Does that sound too good to be true? It kind of is. Because while you can make gifts now, lower your estate’s value, and limit tax liability for estate taxes, you may have to pay a gift tax. So, it’s always best to consult with a professional before making substantial gifts.

Gifts After Your Death

The more common option is to pass assets to loved ones after you die. Many people do this through beneficiary designations or a Last Will and Testament; however, in almost every circumstance, we believe the best way to transfer wealth from one generation to another is through the use of a Trust.

There are many different types of trusts. Many are revocable, while others are irrevocable. Some trusts skip a generation, while others create a shelter for assets to allow Medicaid eligibility.

The reasons for using a trust are many, but our favorites are privacy and headache prevention. What we mean by that is that when you use a trust properly, your assets avoid the probate process— which is a public record. So your wishes stay private and your loved ones don’t have to jump through a year’s worth of hoops.

Trusts allow you to distribute assets any way you want. You can give everything away immediately, you create a system of checks and balances with rules your loved one has to follow to receive their inheritance, you can set it up so your child gets a monthly or yearly allowance, and you can even set it up so they have to tell the trustee what they are intending to use every dollar for and if the use is in line with the guidelines you have in place them they get the money. Trusts are very versatile and are beneficial for almost every family.

If you want to create an estate plan to benefit your Millennial or Gen Z children, we can help. We have been able to create custom plans for all kinds of families— ones with highly responsible children, and those who have concerns about dropping a large asset or a pile of money into a child’s lap. There are ways to provide an inheritance in a thoughtful and wise manner, no matter your situation.

Call us at (404) 736-6066 or visit our website to schedule a consultation. It would be a delight to help you continue to provide for your children, long after you’re gone!