Whether it\u2019s family meetings, early conversations around philanthropic efforts, or educational programs to teach younger people how to manage future wealth, there\u2019s more happening in the field of estate planning than ever before.<\/p>\n
\u201cIt\u2019s less likely I\u2019ll see a client in their 70s or 80s who hasn\u2019t started these conversations,” said Anne Paape, managing director at Chicago-based private wealth management firm Cresset.<\/p>\n
The rise of family governance has been boosted by President Donald Trump\u2019s One Big Beautiful Bill announced last April and taking effect this January. The bill increased the amount of wealth that can be passed onto future generations tax-free, permanently setting the 2026 federal estate tax exemption at $15 million per person, up from $13 million the previous year. The exemption goes up to $30 million for a married couple.<\/p>\n
The bill also included an increase in the amount of annual gifting that can be done tax-free. Up to $19,000 can be gifted to charities yearly without being taxed.<\/p>\n
\u201cThe One Big Beautiful Bill was a big relief,” said Jerrod Pearce, a partner at the Kansas-based family office Creative Planning, \u201cBut now there\u2019s more work to do,” he said.<\/p>\n
Ann Marie Etergino, a senior wealth advisor at investment service firm RBC Wealth Management, said these days she is organizing a lot more family meetings, where several generations are encouraged to have conversations about the kinds of assets children will inherit, how to best manage these assets, as well as conversations around values parents want to pass down to their children along with their financial legacies.<\/p>\n
One of her high-net-worth clients commissioned her to organize financial education classes for the client\u2019s children to teach them basics about investing and tax mitigation, so that his investment funds are properly handled when he dies.<\/p>\n
\u201cThe point is to get the kids more engaged,” she said, \u201cWe usually see these conversations start when grandkids arrive,” she said.<\/p>\n
Mimi Drake, partner at New York-based wealth management firm Cerity Partners, agreed and said there\u2019s increased communication from parents who want to prepare their children to inherit a large amount of wealth.<\/p>\n
\u201cThe days of the big reveal of the will are over. They\u2019ve given way to road maps and increased transparency,” she said.<\/p>\n
Parents are also giving away more and sooner. As their kids start having children, they want to support them to get on the housing ladder or pay for tuition, said Etergino.<\/p>\n
\u201cWe\u2019ve gone from \u2018How do we save money on taxes?\u2019 to \u2018How do we plan to utilise our wealth today?\u2019” she said.<\/p>\n
Still, parents tend to shy away from sharing actual figures on the amount to be inherited, to avoid seeing their kids changing their behaviors radically.<\/p>\n
\u201cParents don\u2019t want kids to know dollar amounts,” said Pearce, \u201cThey don\u2019t want them to think they can coast for the rest of their lives.”<\/p>\n
Besides better communication, Jim Ruggiero, founder and owner of Pennsylvania-based Ruggiero Law Offices, said a strategy that has grown in popularity this year is trusts.<\/p>\n
These flexible tax wrappers can be passed on tax-free and let parents change provisions or beneficiaries throughout their duration. Assets sitting in trusts can then be meted out to children based on preferences, leading to fewer disputes over who takes ownership of a parent\u2019s house or business.<\/p>\n
\u201cIt can be very specific so it reduces the risk of conflict in the family,” he said.<\/p>\n
Revocable living trusts, for instance, are seeing a surge in interest, he said. These trusts allow for parents to liquidate assets from the trust, actively manage them and amend the terms whenever they want. It\u2019s a \u201cwill on steroids,” said Ruggiero.<\/p>\n
For those wanting to minimize inheritance taxes and bypass probate court, irrevocable life insurance trusts have also grown in popularity, he said. These trusts ensure funds are distributed according to the granter\u2019s wishes when they pass on, and protect assets from creditors.<\/p>\n
Etergino, on the other hand, has found people are increasingly considering directly buying life insurance policies. These ensure that any inheritance bill will be paid when parents pass away, thus avoiding liquidity issues for children. Families are also investing in these policies to fall below the threshold of the federal estate tax exemption, she said.<\/p>\n
\u201cFor clients with assets above the $15 million threshold, they\u2019re willing to consider some of these older policies they bought when their children were younger and which can be repurposed,” she said.<\/p>\n
As for ultra-high-net-worth clients, dynasty trusts are the latest tool to secure multigenerational wealth, she said, locking assets into trusts that can sustain dozens of generations.<\/p>\n
Disputes still arise, said Paape, noting a rise in the number of fiduciary litigation cases. Conflicts often come up over the amount of control parents want to retain, she said.<\/p>\n
\u201cThere can be friction over that control and pent-up resentment,” she said.<\/p>\n
Still, what a lot of wealth managers end up dealing with isn\u2019t intergenerational conflict but parents\u2019 unwillingness to spend.<\/p>\n
\u201cA lot of people, even if they\u2019ve saved $1 to $10 million in their lifetimes, they still worry about running out of money in their retirement,” said Pearce. \u201cWe have to do a bit of coaching to teach them how to spend it. We tell them: \u2018If you\u2019re not spending it, your kids or your daughter- or son-in-law will.\u2019 That usually helps.”<\/p>\n
Write to editors@barrons.com<\/p>\n","protected":false},"excerpt":{"rendered":"Whether it\u2019s family meetings, early conversations around philanthropic efforts, or educational programs to teach younger people how to…\n","protected":false},"author":2,"featured_media":472125,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,12381,219090,219091,219092,147,530,6580],"class_list":{"0":"post-472124","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-estate-planning","10":"tag-family-governance","11":"tag-federal-estate-tax-exemption","12":"tag-irrevocable-life-insurance-trusts","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-wealth-transfer"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/472124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=472124"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/472124\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/472125"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=472124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=472124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=472124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}