How to avoid one of the biggest mistakes in your estate plan – failing to prepare for the Great Wealth Transfer

The United States is on the cusp of an unprecedented financial shift known as the Great Wealth Transfer. Over the next two decades, an estimated $84 trillion will transition from older generations—primarily baby boomers—to their heirs, charities, and other beneficiaries. This massive shift presents unique opportunities and challenges, making estate planning a critical consideration for both wealth holders and recipients. Proper planning can ensure the smooth transfer of assets while minimizing tax liabilities, reducing disputes, and securing financial legacies.

Understanding the Great Wealth Transfer

The baby boomer generation, which has accumulated significant wealth through homeownership, investments, retirement accounts, and business ownership, is beginning to pass on these assets on to their children and grandchildren. This shift will reshape financial landscapes, particularly as younger generations inherit not only wealth but also the responsibility of managing it. Without comprehensive estate planning, this wealth could be eroded by taxes, mismanagement, and legal disputes.

My clients plan for their children’s inheritance of their wealth with the caveat that outright distributions may not be the correct fit for all their heirs. Planning this wealth transfer is critical to getting it right.

Key Estate Planning Considerations

1. Updating Wills and Trusts

A surprising number of individuals have outdated wills—or none at all. A will ensures that assets are distributed according to the deceased’s wishes, while a trust can offer additional benefits such as asset protection, tax minimization, and probate avoidance. Given the changing tax landscape, individuals should regularly review and update these documents.

2. Tax Implications and Planning Strategies

Currently, the federal estate tax exemption stands at $13.99 million per individual in 2025, but it is set to drop to approximately $7 million in 2026 unless Congress acts to extend it. Wealthy individuals should consider strategies such as lifetime gifting, irrevocable trusts, and charitable donations to minimize estate taxes.

Additionally, state-specific estate and inheritance taxes vary, with some states imposing taxes on estates well below the federal threshold. Consulting with an estate planning professional can help mitigate potential tax burdens at both state and federal levels.

3. Gifting Strategies and the Annual Gift Tax Exclusion

One way to reduce an estate’s taxable value is through gifting. The annual gift tax exclusion allows individuals to give up to $19,000 per recipient in 2025 without triggering a tax liability. Strategic gifting over time can significantly reduce an estate’s size while benefiting heirs during the donor’s lifetime.

The IRC also allows payment directly to an educational institution at any grade level, college level, higher ed, private school for younger grades for tuition only. Payment of medical expenses applies only to deductible medical costs such as medical insurance, prescription drugs, or payments directly to a provider for medical care. There is no need to file a Form 709 for these gifts because the above-mentioned payments do not fit the IRC definition of gift as used on Form 709.

4. Planning for Retirement Accounts and the Secure Act 2.0

The Secure Act of 2019 and its subsequent updates have changed how inherited retirement accounts are distributed. Non-spousal beneficiaries must withdraw all funds from an inherited IRA within 10 years, which can result in significant tax consequences.

5. Business Succession Planning

For business owners, succession planning is crucial. A well-structured plan ensures the continuity of the business and prevents potential disputes among heirs. Options include transferring ownership through a family limited partnership, selling the business to key employees, or structuring buy-sell agreements funded by life insurance.

6. Addressing Digital and Non-Traditional Assets

With the rise of cryptocurrency, NFTs, and online businesses, estate planning must now include digital assets. Proper documentation of account access, legal authorizations, and secure storage methods are essential to prevent loss or disputes.

For Informational Purposes only and not for legal or tax advice.

About the Author – Marie Feindt, JD 

Marie Feindt is the Planning Specialist – Estate Attorney at Members’ Wealth, a boutique wealth management firm that offers a comprehensive and holistic approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of estate planning experience, Marie and the Members’ Wealth team thrive on bringing clarity and confidence to clients’ unique situations. She believes everyone, young adults and older, need the essential documents to conserve and preserve and transfer assets accumulated during lifetime to the next generation.

Marie received her JD from Widener University School of Law, her bachelor’s degree from Penn State University, University Park and is currently enrolled in the Villanova University Charles Widger School of Law Graduate Tax Program.

Marie is an Adjunct Faculty at the Villanova University College of Professional Studies Paralegal Professional Certificate Program where she teaches Estates & Trusts and Civil Procedure & Litigation and Torts & Personal Injury Law.

Marie volunteers for a monthly legal clinic at The Salvation Army in Chester, PA facilitated by the Christian Legal Clinic of Philadelphia. She has served on the Women’s Commission of Delaware County and as a Board Member for the Delaware County Literacy Council.

Marie enjoys biking, reading, yoga and walking in her free time with her husband and three children.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

You can learn more about how we serve our clients by tapping the button below.

Investment advisory services are offered through Members’ Wealth, LLC., a Registered Investment Advisory Firm.

Registration with the SEC does not imply a certain level of skill or training. We are an independent advisory firm helping individuals achieve their financial needs and goals

Members’ Wealth does not provide legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

This commentary reflects the personal opinions, viewpoints and analyses of the Members’ Wealth, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Members’ Wealth, LLC or performance returns of any Members’ Wealth, LLC client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Members’ Wealth, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results

Copyright © 2023 Members' Wealth LLC