The Great Wealth Transfer: What Baby Boomers Should Know

In what’s been dubbed The Great Wealth Transfer, Baby Boomers are predicted to pass on more than $68 trillion to their children.¹ If you belong to this generation and are attempting to firm up your legacy plan, this guide can help you understand tax requirements and steps you can take protect the  value of your estate. 

What you should know about the Great Wealth Transfer  

1. Planning for medical costs pays off   

What you do today can impact how much wealth you’re able to pass on later. While there’s no crystal ball into the future, most seniors can expect their health care expenses to go up over time. Thankfully, there are solutions available to make this care more affordable.   

• Medicare is health insurance provided by the federal government. Learn more in this quick guide to Part A and B coverage.  
• Long-term care (LTC) insurance. Nearly 70% of seniors will require LTC at some point.2 Because LTC is not covered by Medicare, some people open a LTC insurance policy to keep this care affordable.    

By having these solutions in place, you can keep both normal and unexpected health care expenses from chipping away at the value of your estate.  

2. There may be tax obligations    

While Ohio, Indiana, and Kentucky do not charge estate tax, they handle inheritance tax differently. As the name implies, this tax is paid out by the person inheriting money or property. Both Ohio and Indiana do not have inheritance tax.    

Kentucky, on the other hand, is one of six states that does. If you reside there at your time of death, how much your loved one would have to pay depends on their relationship to you and the value of the property. Typically, the closer the relationship the greater the tax exemption. Use this guide from the Kentucky Department of Revenue to learn more.  

Regardless of the state you reside in, you can count on Uncle Sam to keep costs minimal for your beneficiaries. The federal government does not charge inheritance tax. Plus, they won’t impose estate tax in most cases. Your estate would have to total more than $12.92 million in 2023 to qualify for taxation. Visit IRS.gov to learn more. 

3. Beneficiaries are crucial  

Did you know the beneficiaries listed on your accounts trump your will if there’s a discrepancy between them? That’s why it’s so important to periodically review and update your beneficiaries on relevant accounts like:  

In doing so, you can ensure the assets in your estate go to the intended recipient(s).  

If you neglect to assign a beneficiary at all, your estate could land in probate. This is an expensive and time-consuming process that can whittle away at the value of your estate, so don’t hesitate to review your accounts – even ones opened in the past – to confirm there’s a beneficiary listed.  

4. Trusts offer additional protection 

A will is a vital document in which you can name guardians for dependents, list out your final wishes, and designate who should receive your assets. But it’s important to take a holistic approach to estate planning and consider additional documents, too, as a will alone does not help your loved ones avoid probate (which again, is expensive and can eat away at the value of your estate). A trust may help bridge the gap. 

Creating a trust can be complex, but they offer greater control over how your assets are distributed and can remove probate from the equation. Plus, they go into effect immediately after they’re created and funded and allow you to set provisions for incapacity. A legal advisor can guide you through the process of transferring assets into a trust.    

5. Transparency is key  

You’ve managed your wealth for years. As a result, you know the best way to manage, protect, and grow it. But it’s important not to assume that your beneficiaries share the same knowledge or prowess. Be transparent with them about the value of the assets they stand to inherit. In doing so, they’ll have time to prepare themselves and are less likely to make hasty decisions that cost them in the long run.  

Overwhelmed by legacy planning? A helping hand is in reach. General Electric Credit Union members are entitled to a no-cost consultation with a legal advisor through Wood + Lamping LLP.3 They can help you explore options like wills and trusts and provide you with a better understanding of the tax law in your state. Don’t wait – become a Credit Union member and take advantage of this valuable perk!