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We are witnessing one of the largest transfers of wealth in history. However, this significant financial shift is not without its challenges. For many, particularly younger generations like Millennials and Gen Z, the anticipated benefits of this transfer may come with considerable hurdles.

A recent article in The New York Times highlights some of the complexities involved in this intergenerational wealth transfer, outlining both the opportunities and obstacles that lie ahead. Here’s a closer look at the potential negative impacts of this transfer and what it means for clients planning their estate.

The Landscape of Wealth Transfer

According to the New York Times, Baby Boomers are set to pass on an estimated $68 trillion in wealth over the next few decades. This unprecedented transfer could provide significant financial resources for younger generations. However, the reality is that this transfer may not benefit everyone equally.

Economic Pressures on Millennials

1. Rising Costs of Living: Many Millennials are already grappling with high living costs, particularly in housing, education, and healthcare. As Baby Boomers transfer wealth, younger generations may find that the costs associated with managing or inheriting that wealth—such as taxes, maintenance, or unexpected expenses—can offset the benefits.
2. Debt Burdens: With student loans and other debts at an all-time high, any inherited wealth might be quickly absorbed by these financial obligations. Instead of a windfall, many may find themselves in a position where they are merely managing liabilities rather than enjoying newfound financial freedom.

The Impact of Market Volatility on Wealth Transfer

The economic landscape is increasingly volatile, influenced by factors such as inflation and global markets. As wealth is transferred, it may be subject to fluctuations that can diminish its value:

• Investment Risks: Many inheritances come in the form of stocks or real estate, both of which can be vulnerable to market downturns. Younger beneficiaries may face the challenge of maintaining or growing this wealth amid economic instability.
• Shifts in Asset Value: Properties may not hold their value as expected, particularly in areas with shifting demographics or market conditions. The potential for real estate to lose value can be particularly concerning for younger generations who may be relying on inherited property for financial stability.

Navigating the Wealth Transfer

For clients considering estate planning and wealth transfer, it’s crucial to approach these matters with an informed strategy. Here are some steps to consider:

1. Engage in Open Dialogue: Communication between generations is vital. Discussing financial plans and expectations can help alleviate misunderstandings and ensure that everyone is on the same page.
2. Create a Comprehensive Estate Plan: Working with an estate planning attorney can help outline a clear plan for transferring wealth. This includes considering trusts, tax implications, and ensuring that assets are managed effectively.
3. Educate Heirs: Providing financial education to younger generations can empower them to make informed decisions about their inheritance. This includes understanding investment strategies, managing debts, and navigating the responsibilities that come with wealth.

If you would like to schedule a consultation to talk about creating or updating your estate planning, please feel free to contact estate planning attorneys: Daniel S.Williford at dwilliford@mccmlaw.com or call him at 585-512-3511; or  Spencer C. Malone at smalone@mccmlaw.com or call him at 585-512-3550; or Michael F. McConville at mmconville@mccmlaw.com or call him at 585-512-3517.

This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.

About MCCM

McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979.  With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.

We represent a diverse range of clients located throughout New York State and New England.  They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts.  For more information, please contact us at 585.546.2500.