Some economists have started to say that there is a new rule that separates economic classes in the United States. Specifically, the biggest differentiator in someone’s comfort and economic stability is typically whether or not they will inherit generational wealth upon the passing of their parents, grandparents or other family members.
Those who stand to inherit assets have a much better chance of becoming homeowners and living financially solvent lives. As you start to contemplate the impact that your property may have on the people that you love, you may determine that you want to leave generational wealth for those that come after you.
Advance planning is crucial to maximizing how much your lifetime of economic earnings will benefit the people who inherit from your estate.
Planning can reduce what you lose during probate
After your death, any property that is in your name becomes your estate, and your estate will have to pass through probate court in most cases. The courts help ensure that creditors get the repayment they deserve and that beneficiaries received the assets they should based on either state statutes or the testamentary documents you created.
Unfortunately, when your assets pass through probate court, they are at risk of liquidation to pay off creditors. Creditors ranging from a hospital that treated you before your death and credit card companies to the Medicaid estate recovery program may be able to bring a claim against your estate and reduce what the people you love inherit.
Careful planning can also reduce the likelihood of estate taxes. You may need to change ownership of some of your property so that you don’t end up having a multi-million dollar estate that is subject to relatively high federal estate tax rates.
For many people, trusts will play an integral role in the creation of an estate plan that is capable of preserving their assets after they die. Trust can have the added benefit of limiting how beneficiaries utilize resources, which can potentially help preserve resources for many years in the future.
Your planning can improve the quality of life for those that you love
An estate plan that prioritizes passing generational wealth to your family members can potentially set those that you love up for a much more secure and comfortable future. Whether you need to worry about creditor activity or taxes, your planning can reduce the risk of your assets ending up passing to third parties instead of to your preferred beneficiaries.
Careful financial review and appropriate estate planning measures will make a big difference if you want to leave resources for those that you love when you die.