♠ Posted by Marc J. Soss at Monday, October 20, 2014
Accenture estimates that $30 trillion will pass from Boomers to Millennials over the next 30 years. Will this intergenerational wealth transfer actually happen? Who knows? At one time Boomers were expected to benefit from a similar windfall of equally gargantuan proportions — some $41 trillion at the time of this study (2003). Then reality stepped in, the “great recession” hit (likely the worst global recession since World War II), incomes stagnated, people lost their jobs. More recent estimates now put the expected Boomer inheritance at $8.4 trillion.
While uncertainty is unavoidable, the best we can do is manage it. And good estate planning is all about managing uncertainty. The trick is knowing which uncertainties or “risks” to focus on. Traditionally, the risk factor most estate planners and their clients spent most of their time fretting about was taxes. In reality, estate litigation poses a much greater risk for most people. According to this study fewer than 2 out of every 1,000 Americans who die — 0.14% — owe any estate tax whatsoever because of the high exemption amount (which has more than quadrupled since 2001). By contrast, the potential wealth-destroying risk posed by estate litigation is exponentially greater. In fact, according to a study cited this weekend in a WSJ piece entitled When Heirs Collide, it’s a risk that actually impacts around 70% of all families. Roughly 70% of families lose a chunk of their inherited wealth, mostly due to estate battles, according to research conducted over two decades by the Williams Group, a San Clemente, Calif., firm that helps families avoid such conflicts.
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