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Estate Planning Considerations

On Behalf of | Apr 6, 2023 | Firm News

The death of a loved one is an emotionally-charged time when important decisions must be made. Things are made easier when a will spells out their wishes. Failing to properly handle estate planning can mean family members must resort to the court to determine how the estate will be handled and potentially engage in a long-term legal fight with loved ones.

Cerulli Associates predicts the following:

  • Nearly $85 trillion in personal wealth will pass down from one generation to the next from now to 2045, with most assets coming from baby boomer households
  • Generation X, those born from 1965 to 1980 will receive the most money at nearly $30 trillion over 25 years, which includes close to $9 trillion in 10 years.
  • Millennials (1981 to 1996 could see approximately $27 trillion by 2045

With significant amounts of money at stake throughout multiple generations, decisions involving asset distribution should be attended to sooner rather than later.

Dwelling dilemmas

Legal matters become personal when it comes to the family home. One common strategy is for parents to “sell” their house while drafting a deed that they are allowed to continue residing in the dwelling. While a seemingly reasonable step, issues can arise and this may not be the best plan.  Some problems with this option are that the recipient of the house can be taxed on the appreciation in value of the house from the time of purchase by the parent making the gift.  Heirs could become defendants in lawsuits (and thereafter have a judgment taken against them) and/or have creditors that may seek a lien on the house.  Applications for Medicaid can be impacted if the transfer was done within five years of the application for Medicaid (the applicant could be ineligible for Medicaid benefits for a period of time, often called a “transfer penalty”.  Being ineligible for Medicaid when it is needed can be a costly disadvantage to gifting a home.

As people grow older, estate planning becomes vital. While money and other assets cannot ease the transition following the death of a loved one, it can provide long-term stability in the future, regardless of how uncertain it feels.