Potential changes in the law and the economy can threaten to render strategic opportunities in estate planning much less valuable years down the line. For any keen financial planner, it may be prudent to consider a 100-year estate plan for multiple generations of heirs. This ensures that family wealth is properly protected and fairly distributed in accordance with your wishes.
Taking control of your legacy can seem like a daunting challenge if you become the patriarch or matriarch responsible for managing generational wealth. For those who want to secure the financial health of their children’s children and beyond, is it possible? Legally speaking, yes! Creating an estate plan that provides a clear vision for your lineal descendants over the course of a hundred years involves a thoughtful approach and can be structured for a family of any size.
How It Can Work
There are many details that go into the crafting and administration of a 100-year estate plan; however, several of the main considerations for planning include the following:
San Diego Estate Planning
San Diego Estate Planning
Dive into the world of estate planning with this quick and straightforward video…
- Basic Math: If the first generation plans to keep the second generation financially equal, is the second generation expected to do the same for the third generation? What happens if each member of the second generation has an unequal number of children? The question then becomes, is the family trying to keep each third generation member on par with one another? Trying to achieve financial equality is mathematically, not to mention financially, challenging and would require the second generation to transfer wealth among themselves to make things equal among the third generation. The issue is whether a second generation sibling will be rewarded or penalized for the number of children they have.
- Timing: If it’s safe to assume the goal is financial equality within each generation, what markers are used to measure equality? Is it when siblings among the older generation decide to stop growing their family? Must there be a written notice to the family indicating they have decided not to have any more children? What happens if there is a divorce? Or a family member either remarries a younger partner or a spouse who has children of their own? Do stepchildren get counted? When the first or the last member of the older generation passes away, would that be considered a marker? As far as snapshots in family photo albums are concerned, they can work well as a time marker but attempting to create one for the purpose of deciding on wealth distribution for an entire family can create unintended consequences.
- Ideological Framework: Does ensuring financial parity for each child of a generation with their siblings and/or cousins disincentivize them to work hard? On the other hand, if both the gains and losses in estate value will be averaged out among family members of the same generation, what drawbacks are there to making investments? For high net worth families, pooling assets among the younger generation could create a fundamental lack of discipline for building more wealth.
- Taxes: If the value of assets to be transferred is relatively low, the plan could be implemented by using the annual $18,000 gift tax exclusion. Where significant wealth exists, periodic distributions intended to keep amounts equal among a generation would at a minimum create gift-tax liabilities for the family.
The above considerations are used to inform you of the selection of estate planning techniques that best honor your wishes and meet your family’s long-term needs.
What Will Work Best for You
In addition to basic finances, making decisions about children, assets, and real estate can come with stress and conflict. It is also wise to invest time as a family in establishing your core values and principles, eliminating squabbles over entitlements, such as education, medical care, and living expenses throughout a 100-year estate plan.
To navigate the complexities of estate planning, it is crucial to work with an experienced professional, like Rod Hatley, who takes a holistic approach to protecting your legacy. As the best asset protection attorney in San Diego, his top priority is building a plan that facilitates a smooth transition of assets, real estate, and everything you value to current and future generations. To make sure that your children and your other heirs receive all they deserve, get in touch with Hatley Law Group, APC today!
24/7 Protection
24/7 Protection
With DocuBank, you have secure access to your medical information whenever you need it.