Newspaper article THE JOURNAL RECORD

Passing the Bucks: Baby Boomers Stand to Inherit Trillions

Newspaper article THE JOURNAL RECORD

Passing the Bucks: Baby Boomers Stand to Inherit Trillions

Article excerpt

Associated Press

NEW YORK _ They were born of the Great Depression, started families in the prosperous '50s, and watched the value of their homes and stock portfolios skyrocket in the last two decades.

Now, the parents of the postwar baby boom generation, many of them also receiving generous retirement benefits, are poised to pass on their accumulated fortunes to less-fortunate next of kin.

Economists estimate $8 trillion in collective net wealth will transfer from one generation to the next over the coming 20 years, the largest movement of inherited wealth in the nation's history.

That's a bit of poetic justice, some might say, considering that same parental generation helped amass the nation's largest debt load, now at around $4 trillion.

Signs of a financial shift already are visible. Some parents, for example, lavish gifts on adult children, enabling them to make a downpayment on a new house or start a business.

Edward Wolff, an economics professor at New York University who has studied the net worth of Americans among different age groups, has estimated 80 percent of the wealth of the average baby boom family comes from gifts or inheritance.

By contrast, nearly all the wealth of seniors comes from savings or capital gains on investments, Wolff said.

"Baby boomers are very poor savers. For some people this will be manna from heaven. They may get inheritance from a relative they've never heard of. But others who might be counting on money may find their inheritance depleted," from health care or other living expenses, said William Strauss, co-author of "Generations: The History of America's Future, 1584 to 2060."

Going strictly by mathematics, the anticipated windfall works out to roughly $50,000 per baby boomer family, Wolff said. But the inheritance bounty won't fall evenly on this postwar generation. Three-quarters of the nation's assets are held by the wealthiest 20 percent of families.

"Minorities will probably receive the least inheritance," Wolff said, noting that the wealth of non-whites is on average about a third of the wealth of whites. "It will exacerbate the inequalities among the baby boom generation between blacks and whites."

Still, even a modest inheritance calls for some advance tax and legal planning.

Professional advisers say estate planning should be just one part of a family's overall financial-planning picture, along with preparing for education costs, insurance needs or retirement.

"There are many people who don't understand the extent of the family wealth," said Jeffrey Lowin, who heads the trusts and estates division at the New York law firm of Reid Priest. "Ideally, parents should sit down with their children to prepare for the nature of their inheritance . . . so the children can do their own planning. …

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