It's expected that boomers and their parents' generation will pass down $84.4 trillion in assets through 2045, according to Forbes. Paul Karger, co-founder and managing partner of financial firm TwinFocus, joined Cheddar News to discuss wealth transfer between parents and their children and when it's a good time for a conversation between them.

<div class="block">It&#39;s expected that boomers and their parents&#39; generation will pass down $84.4 trillion in assets through 2045, according to Forbes. Paul Karger, co-founder and managing partner of financial firm TwinFocus, joined Cheddar News to discuss wealth transfer between parents and their children and when it&#39;s a good time for a conversation between them.</div>

Stretching Your Dollar

Stretching Your Dollar: The Great Wealth Transfer is Coming Soon

It's expected that boomers and their parents generation will pass down $84.4 trillion in assets through 20 to 45. That's according to Forbes, that's a huge chunk of change that can drastically help younger generations many who are struggling to find their own financial security. So joining us now is Paul Carter, he's the co founder of Twin Focus, which is a financial firm. So Paul, let's start from the very beginning. I'm a millennial. So is it important for me to have a conversation with my parents on whether or not they're planning to transfer their wealth, Michelle? Great to be here. Uh It's a great question. Um You know, unfortunately, the topic is not really up to uh the child. It's, it's really a a mom and dad conversation and mom and dad tend to uh to have this conversation really in their timing. Um We do advise our clients here at Twin focus to have those conversations with their Children, you know, early and often. But in the end of the day, it's really when mom and dad feel that the conversation is most comfortable to have. Now, when is the right time to discuss details on an asset transfer. Let's say you're one of those parents who want to have that conversation. You know, again, it's, it's really circumstance dependent. Uh and it's really different for every single family uh at a very minimum. You know, we do advise families to start having some kind of conversation around wealth, late teens, early twenties and, and certainly before little Johnny or little Susie comes home and says they've gotten engaged and then you need to shotgun a conversation. Let's talk about some of those terms that get thrown around like power of attorney. So what exactly is that? And how should you decide who has that power of attorney? Uh Another great question. Uh A power of attorney is a document, a legal document that provides uh somebody else besides you to make financial decisions on your behalf. Um However, it's worth noting that this is not the only important document and fiduciary uh that you need to think about when you're thinking about estate planning. You, you also need to think about a personal representative which is an individual who would help sort of administratively handle your estate in the event of your untimely demise. Uh You also need to think about what's called a health care proxy. And in many ways, a health care proxy can be more important than a power of attorney because it actually deals with your health and health care and well-being uh above and beyond your financial matters. Uh, and then there are some other fiduciary rules to think about like trustees and so on. And now most people think that wills are the only way to pass along wealth, but that's not correct. Right. And how can loved ones give money when they're still alive? Great questions. Uh, I, it is not the only mechanism to pass money. Um, the US government allows each individual up to approximately a little shy of $13 million to pass to anyone to heirs to friends, whether it be during your lifetime or at debt, anything that you give above and beyond that is taxable by the federal government under a gift tax. Um But there are other mechanisms you, you're actually able to give, you know, 15 16 $17,000 per year uh per individual you from your estate to, to another uh with no gift tax. Um And that can be done annually. Now, the majority of millennials expect to receive around $350,000. Is that a realistic number? Uh Well, from your, your survey, you just previewed, it looks like two thirds of those folks don't anticipate getting anything. Um So, you know, that, that sounds like an average. Uh Certainly, I think there are families that are planning to pass down a lot more wealth than that to the next generation. And there are many of us out there that uh you know, will receive nothing. Um You know, So it's, it's fact dependent. It sounds like a realistic number. Um, and it may sound like a large number if you've never had something of that magnitude. Uh, however, you know, parents are always juggling giving enough so that, you know, individuals can do anything but not so much. They do nothing in the words of Warren Buffett. Now, Paul should a wealth transfer be included in your future financial plans? I know we have a lot of young families who are watching absolutely to the extent you have transparency into that. Um But again, you know, for a whole variety of reasons, some families are just not, you know, mom and dad are just not comfortable, uh, relaying how much is going to go to next generation. Um You know, again, they want to ensure that they've got productive members of society as Children. Uh, a lot of times once families feel that their Children have reached an age where they're gainfully employed and being productive members of society or dare I say before they get married and there needs to be some type of marital planning in advance families, have those discussions. Now, if I'm looking to pass my wealth on, do you have any tips for doing? So, uh, my, my major tip is to think long and hard about who it goes to because, you know, back to my point, uh, you know, you want to ensure that the wealth is going to truly be enhancer, an enhancer in somebody's life and not a detractor. And while everybody at first blanch, you know, may say that uh you know, any type of funds will enhance my life. It can also be a detriment if you, you know, if you don't know how to handle the funds responsibly. All right, so what should people keep top of mind when it comes to keeping their money secure when it comes to estate documents? The, the major thing we share with our families at Twin focus is at a very minimum. You should be reviewing your estate plan approximately every five years. You know, people's lives evolve, relationships, friendships evolve back to our earlier conversation around fiduciaries and these various roles within your estate, those relationships evolve as well. Uh And so we think it's wonderful to, for families to revisit this estate planning exercise every five years, but it is absolutely an important exercise and in many ways, it can be more important than simply investing your money. Well, thanks for joining us. That's Paul Carter. He's the co-founder of Twin Focus.