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What is a wealth transfer plan?

Over 50 percent of American adults do not have estate plans, and those lacking this preparation may inadvertently create a very tangled and painful situation for surviving family members. Surprisingly, even those who do have estate planning documents can trigger the loss of family wealth for generations to come. While most people know they should have a will and may even work with an attorney to draft one, they are unfamiliar with the concept of a wealth transfer plan, which should always be part of a comprehensive estate plan. Wealth transfer planning involves taking proper steps to prepare and inform family members in advance about the goals for the estate and where assets will be transferred.

Preventing loss of family wealth

It is not uncommon for family wealth to erode. In fact, 70 percent of wealth is lost by the second generation and 90 percent is lost by the third generation. This often happens as a result of disagreements and jealousy among family members in relation to the distribution of assets. Some heirs may feel they did not receive their proper share, while others may simply be baffled about the inheritance decisions made by their loved one.

Wealth transfer planning can help prevent the loss of family wealth by communicating with and preparing heirs for their inheritance. Effective estate and wealth transfer planning involves:

  • Acquiring estate planning documentation with the help of experienced legal counsel
  • Communicating clear financial objectives and intentions to heirs
  • Informing family members of any philanthropic intentions for the estate
  • Introducing family members to attorneys, tax advisors and other financial professionals

With the help of an attorney, it is possible to establish and maintain estate planning documents and carry out a wealth transfer plan to guarantee understanding and peace for future generations. Ideally, communications regarding an estate and the transfer of wealth should start well in advance of the death of the estate owner.

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