Heir Raising Ideas

“I don’t want to achieve immortality through my work…I want to achieve it through not dying.”
~ Woody Allen

The first member of the baby boomer generation (1946-1964) is turning 62 this year and becoming eligible for Social Security. Our boomer clients are no different from other boomers. They have worked hard to accumulate financial security, and they intend to enjoy their retirement years and also to leave inheritances for their children. Yet, we often hear from our clients, “I’m not sure that my children are ready to manage an inheritance.”

Our response: Now is the time to teach your children how to use their inheritances wisely. This process requires explaining what your legacy will be, understanding the tools available to make it happen, and employing those tools properly. In this article, we will look at some basic planning tools for the process, and in the next issue of the newsletter, we will look at a legal document known as a trust that allows you to control your assets after you are no longer around.

Family Summit
Just like your parents said, “Sometimes it helps to talk about it.” We encourage our clients to sit down with their children to discuss their wills and how their assets will be distributed. The discussion should cover your intentions and your legacy. In addition, you can review the estate planning tools you have used and why you chose them. These meetings can be difficult, so BWFA offers a service called the Family Summit to facilitate discussions and cover the important issues.

Letter of Intent (LOI)
You and your spouse may wish to write a Letter of Intent (LOI). The LOI covers practical matters, such as where your important documents are kept, your funeral requests, and other wishes not included in a will. Just as importantly, the LOI is a great place to explain the legacy you would like to leave and reinforce statements you have made to your heirs in the past (such as during a Family Summit). Finally, the LOI can include instructions for your children, such as opening a “stretch IRA.”

Stretch IRA
Many of you have accumulated substantial assets in IRAs, and some portion of those assets will be left to your children. A “stretch IRA” can help your children obtain the maximum benefit from their inheritance.

IRA guru Ed Slott notes, “The stretch IRA is one of the greatest financial legacies that an IRA owner can leave to his or her loved ones.” The stretch IRA allows the beneficiary (your child) to take distributions from an inherited IRA over his or her lifetime. This allows the remaining funds in the IRA to keep growing tax-deferred for years or decades.

For more information about stretch IRAs, go to the “News” section of our Website and read our articles: “Let it Roll, Baby, Roll” and “How Far Can You Stretch? Getting the Most from Your IRAs.”

Call Us
Estate planning deals with issues of mortality, and that’s why all of us are tempted to put off addressing them. BWFA can help you develop and implement your estate plan, thus leaving you freer to enjoy your retirement and your time with your family.

Woody Allen has an answer about mortality, too: “I am not afraid of death, I just don’t want to be there when it happens.”