The Great Wealth Transfer: Effective Management for Baby Boomers

Over the next two decades, 78 million baby boomers will transfer a staggering $84 trillion. Interestingly, 85% of this wealth transfer, or $72 trillion, goes directly to their children and grandchildren.

This unprecedented transfer of wealth isn’t just about passing down large amounts of wealth to future generations; it’s about educating your heirs to nurture and preserve the assets for important causes and their heirs.

If you’re a Baby Boomer, you may be contemplating the best way to pass your wealth to your heirs. If that describes you, this blog will look at three important financial planning strategies that every Baby Boomer who is in this position should consider as a part of their wealth transfer planning process:

  • Estate and legacy planning
  • Tax Planning for Baby Boomers
  • Multigenerational financial planning

As financial planners in Washington, DC, we specialize in helping affluent individuals and families create sophisticated multigenerational financial planning strategies, that include minimizing tax and maximizing wealth transfer.


Estate and Legacy Planning for Baby Boomers

Think of estate and legacy planning as building a family tree that can last for multiple generations. As a family tree traces and connects generations, estate planning lays down a clear path for passing on your assets, values, and beliefs. 

It involves the development of a prudent plan for distributing your estate to heirs and organizations that will preserve your legacy and wishes. This requires careful planning to ensure your estate’s plan pursues its intended purpose. You want a seamless solution not contested by family members who feel left out. Your process will create a lasting structure that supports and honors your family’s past, present, and future.

There are no cookie-cutter solutions for how you transfer your wealth. It should be highly customized and unique to your family’s financial situation and interests. 

Your estate plan shouldn’t be viewed as a one-and-done task described in one document. It should be an ongoing, dynamic process that evolves with major life events. 

This ensures that as your life evolves — whether it’s the arrival of new family members, changes in health, or new financial goals — your estate plan evolves with these events to stay aligned with your wishes and goals for transferring your wealth. 

The foundation of a comprehensive estate plan is the use of trusts. Trusts can ensure the smooth transfer of your wealth, no matter what you’re passing on – real estate, cash, stocks, life insurance, etc. They help distribute your wealth fairly, manage tax burdens, and transfer more assets to your heirs.

Trusts can also protect family harmony, encourage responsible behavior, and protect your legacy from risks like divorce, lawsuits, and bad business decisions.

Brown|Miller Insights: Managing your wealth is about preparing for ups and downs in the economy and securities markets. By getting to know you, we create a personalized blueprint that includes a wealth management plan and a tailored investment approach.


Tax Planning for Baby Boomers

As you consider how you want to transfer your wealth, tax planning should be high on your planning list to ensure your heirs are not negatively impacted more than necessary. One of the key aspects of tax planning for wealth transfer is minimizing the tax burden on both you and your heirs. 

One example of using tax-efficient planning is the use of Roth IRAs

Let’s say that you have a mix of traditional and Roth IRAs. You can spread the tax burden by strategically converting a traditional IRA to a Roth IRA over a period of years. Although the conversion incurs taxes at the time of the transfer, the Roth IRA grows tax-free going forward. 

Unlike a traditional IRA, when your heirs inherit a Roth IRA, they receive the funds without paying income tax on withdrawals. This strategy can produce tax-free benefits for heirs, thereby enhancing the value of their inheritance.

Another approach involves gifting assets during your lifetime. Under current tax laws, you can gift a certain amount yearly without triggering gift taxes ($18,000 per recipient in 2024, $36,000 if a joint gift from you and your spouse). 

Brown|Miller Insights: At Brown|Miller, transparency is our top priority. We believe in being completely open with you. When you choose us, think of us as your retirement guide. We’re here for you every step of the way, from your working years to your transition years to your retirement years. Our client relationships stand the test of time. 


Multigenerational Financial Planning

Multigenerational financial planning helps you orchestrate how your wealth is used and distributed across several generations. This can include:

  • Establishing a comprehensive plan now addresses your immediate financial needs and longer-term objectives, ensuring continuity for multiple generations.
  • Effective strategies for transferring wealth are critical. It is vitally important that these strategies are thought out well in advance of actual events. This can involve estate planning tools like wills, trusts, and philanthropic strategies to manage assets and taxes to ensure a smooth transfer to your beneficiaries.
  • Educating younger family members about financial responsibility and involving them in financial discussions is also crucial. This fosters financial literacy and prepares them for future roles as caretakers for your family’s wealth.
  • Understanding and managing risks that could impact the family’s financial well-being, including market risks, health risks, tax codes, and business risks.
  • Ensuring that older family members have sufficient resources for retirement while balancing the transfer of the wealth to younger generations.
  • Aligning the family’s financial decisions with its core values, beliefs, and long-term vision for impacting the lives of the less well-off.
  • Adjusting the plan as family circumstances are impacted by life’s changes: Marriages, divorces, births, catastrophic illnesses, and premature death.
  • Working with financial advisors, tax professionals, trust officers, and legal experts to develop and maintain a robust multigenerational financial plan.

Brown|Miller Insights: Our team of McLean CERTIFIED FINANCIAL PLANNER™ professionals is here to guide you through the retirement planning process personally. We focus on creating a plan that enriches your life and honors the legacy you wish to leave for your family.

We understand life is full of changes – both the expected and unexpected. Your goals, needs, and plans are subject to constant change. That’s why our retirement plans are designed to evolve with the lives of our clients. 

Crafting a rigid plan that doesn’t accommodate inevitable change would not be in your best interests or the best interests of your heirs. We’re committed to building financial strategies that fit your ever-changing needs every step of the way.

Ready to learn more about our wealth transfer planning services? Contact us for an introductory call.


Disclaimer: This article is intended for informational purposes only, and not to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone.  Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector, or the markets generally.  

The information provided in this article represents the opinions of Brown Miller Wealth Management (“BMWM”) and is expressed as of the date hereof and is subject to change. BMWM assumes no obligation to update or otherwise revise our opinions or this article.  The observations and views expressed herein may be changed by BMWM at any time without notice. The information may be based on third-party information, which is deemed reliable, but its accuracy and completeness cannot be guaranteed.  

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Author: Christopher W. Brown, CFP®, CIMA®

Christopher W. Brown is the Founder and Managing Principal at Brown | Miller Wealth Management.