navigating wealth transfer estate planning

Multigenerational Shift: Navigating Great Wealth Transfer is a Boon For Attorneys, Estate/Investment Planners

Wealth worth $84 trillion is on the way to pass from the older generations and Baby Boomers to the younger generation by 2045.

It should be kept in mind always that passing the legacy goes much beyond a will. Despite the generational shift, financial planners and estate planning attorneys are seeing a marked increase in the existing clients seeking assistance in keeping, managing, and transferring their wealth.

Read on to delve into the various kinds of wealth management concerns that attorneys deal with for their clients, the growing worries of clients due to newly proposed tax laws, ways to manage the transfers, and more.

How are various lawyers and firms assisting their clients in wealth management?
In recent times, a lot of work done by attorneys, including Alan Parker, chair of trusts and estates practice at firm Pullman & Comley, is managing huge wealth amid the changes in tax laws.

In addition, some attorneys help their high-net-worth clients get ahead of the recent federal estate and gift tax exemptions expected to sunset in Jan 2026. The 2017 Tax Cuts & Jobs Act almost doubled the gift tax exemptions for individuals and couples, resulting in inflation.

This year, the federal exemption amount rose to $12.92 million from $5.6 million in 2017. The amount is almost $25.84 million, double the value mentioned earlier, for married couples.

In the state of Connecticut, the gift and estate tax exemption is almost the same as that at the federal level. At present, Connecticut’s top gift and estate tax rate is 12%. This has been possible because the state, over the last decade, has been making attempts to turn itself more attractive to high-net-worth individuals.

Similar to gift and estate tax laws, it’s imperative that clients are educated about the types of assets they have, the rules associated with income and wealth transfer, and what they intend to do with all their property.

In 2017, when the law changed, Parker said,” And now it’s just not that long away,”. “If these high-net-worth individuals aren’t planning their estates appropriately, they may lose out on an opportunity if they don’t act before 2026.”

Changing laws, growing needs
Dane Dudley, a partner in the law firm Day Pitney and chair of its private client practice, says,” The growing need for estate planning attorneys comes from a combination of aging clients and changing laws.”

He says there’s an increase in client activity when new laws are proposed, about to go into effect, or planned for sunset.

Dudley said, “With the growth of new wealth, it happened to be a good time for some people to do some planning, and that was a pretty big bubble. They wanted to take advantage of the exemptions that they thought might go away.”

He said that, in addition, the 2020 pandemic resulted in an increase in the estate planning work for attorneys as clients had more time during lockdowns and growing health concerns.
Managing the transfer
Attorneys in estate planning often are confronted with client concerns like who will handle their finances when they can’t manage them, what level and kind of protection they have for their families, and the extent of flexibility in asset management.

Attorneys encounter situations wherein clients have a lot of wealth to pass on to future generations and donate the remaining to charities. Sometimes, these discussions take up a lot of time. While passing everything to children seems the easiest alternative, sometimes clients suffer due to tax burdens.

Sometimes, parents are concerned about their children’s capability to properly and judiciously handle their wealth, so they prefer to opt for more controlled asset management, such as a restricted trust. If you are facing similar legal concerns, reach out to Overland Park estate planning attorneys.

No set rules; take your own decision
Eric Hogarth, a partner in the retirement planning firm Johnson Brunetti, is mostly engaged with older clients in their 70s and 80s. They are expressing concern about the fact that they haven’t saved much for their children and wish to gift them most of it while they are alive rather than after their death.

The older generation adds that while they want to save some money to handle their health-related issues, they aren’t inclined towards paying so much taxes. That makes asset protection a major task of estate planning firms.

Hogarth says that he has been seeing a lot of cases of inheritances getting lost, not because the younger generation is spendthrift but because they are making mistakes.

Hogarth mentions that he encourages his clients to understand,” It’s their money and there are no set rules of what they have to do with it. Do what you want to do. Have these conversations and set it up to do what you want to do.”


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