Transferring wealth is a family affair

The transfer of wealth has begun

The transfer of wealth has begun.

As the baby boomers’ parents make their exit, their assets and accumulated wealth are beginning to pass on to their children and their children’s children. 

According to a recent extensive survey by Decima Research, this will involve a one trillion dollar transfer of wealth over the next two decades in the form of cash and securities, real estate and other valuables.

 Planning for the trillion dollar wealth migration

As part of your overall wealth management strategy, investors need to consider various strategies and plan for the transfer of that wealth to their children and perhaps their children’s children. And the sooner the better. 


 The gift of giving

There is a lot to be said for doing as much as possible while still alive. The most tax-efficient way of transferring wealth to the children and grandchildren is cash gifting. Gifts of cash leave a financial benefit to family members who can use it to further their own lives by funding an education, buying a home or building their own investment portfolio. 

However, a program of cash gifting to your offspring and grandchildren should depend on first making certain that you and your spouse will still be able to provide financially for your own retirement years.


The matter of trusts and insurance

If cash gifting is not an option, various trusts and insurance products have emerged over the past few years that help manage the transfer of assets to beneficiaries.

For example, what is called an “intervivos” trust (set up while a person is alive) can place assets (that might otherwise form part of the estate) in a trust for beneficiaries. How the assets are to be invested and distributed to beneficiaries can be specified in the terms of the trust. The income derived from the trust’s investments is usually received in a more tax-advantaged way than if it was employment income. 

This may appeal to those baby boomers who themselves are in the prime of their life, successful in their own right and most likely in a high marginal tax bracket.

Children and grandchildren who may have trouble handling a large sum of money may be better served if their inheritance was  in the form of a trust set up with specific disbursement instructions.

Another insurance option to consider is a Universal Life Insurance contract with your child or grandchild named as beneficiary. 

Your annual policy deposits grow in an insurance investment portfolio on a tax-sheltered basis. After your death, the policy and its holdings pass to the beneficiary without any tax owing by the estate or the beneficiary.

Turning promises into action

Successful estate planning requires good communications among all parties concerned. 

Communication and consultation also goes a long way to reduce the possibility of disputes and hurt feelings after you’re gone.

Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). The views of the author do not necessarily reflect those of RJL. This article is for information only. Securities are offered through Raymond James Ltd., member CIPF.  Financial planning and insurance are offered through Raymond James Financial Planning Ltd., which is not a member CIPF. For more information feel free to call Jim at 594-1100, or e-mail at and/or visit


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