Estate Planning

Will the Great Wealth Transfer Be Not So Great?

By Hull & Hull LLP

Estate practitioners are fond of discussing the “unprecedented transfer of wealth” that is set to occur over the next few decades.  The idea is that as the asset-rich baby boomers age and pass away, the number of estates being distributed (and the size of the estates) will be at a level never before seen. 

However, as an interesting article in the New York Times points out, people expecting a windfall when mom or dad die might be in for a surprise.  In his article, 8 Reasons You Should Not Expect an Inheritance, Ron Leiber points out that while the aging population might be wealthier than in generations past, people are also living longer and have higher expenses. 

Some of the issues that Mr. Leiber raises in his articles are more relevant to U.S. residents, but most have more general application; here are some of them:

1.       People are living longer.  In 2005, the life expectancy more males who reached the age of 65 was 82 while for females it was 87;

2.      Work-place pensions are becoming less common, meaning that people are more reliant on the financial markets (and their ups and downs) to generate retirement savings;

3.       The skyrocketing costs of health care will increasingly be passed to the consumer; and

4.       Divorce is on the rise, meaning that the aging retirees might be sole income, not dual income, and, thus, have greater expenses (and less wealth to pass on).

While the fact remains that the aging boomers have greater wealth than ever before, it’s worthwhile for those engaged in both planning and litigation to keep in mind the outside forces that will affect the size of an estate.

Have a great weekend,

Megan F. Connolly

Full post as published by Toronto Estate Law Blog on July 04, 2008 (boomark / email).