Millennials: Prepare to become ‘Richest generation in history’

Wealth transfer: Millennials, prepare to become ‘Richest generation in history'

Millennials are on course to become the ‘richest generation in history’ according to the Guardian due to a wealth transfer from the Baby Boomers over the next 20 years.

With so much wealth in property, pensions, ISAs, etc, there will inevitably be a wealth transfer to Millennials (Gen Z and even X) 😀.

How should you and your family prepare such that you don't give away that generational wealth in taxes?

I believe you need to parent your parents, respectfully. i.e. Get involved in the admin required for this wealth transition over time.

But you need to do it for them not you (even though you may benefit one day).

This is a sensitive topic culturally.

Plus, not everyone has a living parent or any wealth that could be inherited.

I'm sharing this to get us thinking as not every family has done estate planning.

To do this properly, someone in your family (maybe you?) needs to take responsibility for it.

On top of that, you'd need to approach this sensitively and confidentially and keep all your siblings looped in by communicating.

👉🏽 We cover Estate Planning extensively in Week 10 of our bestselling book, Financial Joy a 10-week Plan to Help you Banish Debt, Grow Your Money and Unlock Financial Freedom.

How To Prepare For The Generational Wealth Transfer

Having been through this difficult but important process with our parents, here are 8 important questions to ask your parents 📝:

1. What do you own? And where in the world is it?

Document the following:

• Asset type & value
• Title docs
• Address
• Access details

2. What do you owe? And to whom?

Document as above.

You need this information so that you can work out your parents' overall net worth.

Plus, it will help you easily know who to contact and what priority of debts to focus on paying off if you ever need to do so.

3. What are your wishes for your assets? 

If they have a will, where is it stored?

If not, talk about it sensitively and keep minutes.

The key is to get this conversation going. 

Frustratingly, for a lot of people, culturally, this conversation is a taboo even though it shouldn't be.

We especially see this in our Nigerian and African culture where some parents think you're wishing them to die if you talk about writing a will.

It shouldn't be when there is a life-threatening situation that we take this seriously. 

We need to be smarter and real about this.

4. Do you have Life Insurance?

Document the following:

• Provider name
• Cover amount
• Policy number
• Access details

5. Do you have any other insurance products? 

Here I'm talking about things like pre-paid funeral plans.

We need to move beyond GoFundMe's when someone passes away 🙏🏽.

I'm reminded of a story my mentor told me about an Indian funeral that he went to.

Everyone was celebrating and that's because the parents of the children got their act together and prepared for the inevitable.

In fact, the two children in their 30s and 40s were able to retire early because their parents had positioned them to inherit their wealth properly.

An alternative to pre-paid funeral plans is for siblings to save into a joint account monthly.

Even £20 – £50 a month saved between siblings will go very far.

Last year, I sadly had to organise a funeral for a family member and it cost around £15,000.

I learned so much from this experience of trying to negotiate with so many people in the family to get this money organised. 

Such costs will only get more expensive over time and the last thing you and your family want to do is face the stress of no money whilst dealing with the emotional turmoil of losing a loved one.

6. Do you have a Lasting Power of Attorney (LPA)?

Here I'm talking about an LPA for ‘Health and Welfare' or ‘Property and Financial Affairs'.

If they don’t have this in place, click here to start on the government website.

This takes months so don't delay!

7. Have you made any form of inheritance tax planning?

i.e. gifted assets to anyone?

The 7-year rule, for example, is important for reducing inheritance tax liability.

There are also other forms of inheritance tax and gifting rules that you may need to be aware of.

With careful planning, your parents could reduce or completely remove any future potential inheritance liability.

8. Do I have your permission to contact relevant professionals to offer our family some advice?

Seek out resources to help your family get organised.

You may need tailored financial advice

Read week 10 of our book where we've summarised and arranged everything for you practically with action steps.

Conclusion

These conversations can feel uncomfortable BUT talking about it and preparing for the inevitable will give your parents (and you) a lot of peace of mind and preserve family wealth.

A huge part of building and keeping wealth is doing admin.

There is always a cost to delay with these topics, so taking small steps to get things in order for the future will pay off.

Even if you did one thing on this list, it is progress.

One big point to consider is that there will be a future of higher care costs for some of our parents, so it will be interesting to see how this plays out.

Either way, please act now not later.

Read more about the generational wealth transfer to millennials:

• Order our debut book, Financial Joy
• Guardian article about the wealth transfer
• 5 Signs You'll Become Wealthy 10 Years From Now

Watch this video about the generational wealth transfer to millennials:

Have any of these topics come up in your family conversations yet? Comment below and share 🙂