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We're in an era termed the Great Wealth Transfer, with Baby Boomers set to pass an estimated $84 trillion to younger generations by 2045, including $16 trillion within the next decade, as per Cerulli Associates. However, the 'third-generation curse' could diminish this inheritance, with 90% of wealthy families potentially losing wealth due to mismanagement, says AMG National Trust. Despite 98% of U.S. business owners having an estate plan (Brown Brothers Harriman), 94% haven't discussed it with their families, often due to concerns about the impact of this information.

Effective estate planning involves more than just tax considerations; it includes a deeper, values-based approach. Communication of these values and the rationale behind one's estate plan is crucial to prevent misunderstandings and the erosion of wealth across generations. Estate planning starts with understanding personal values and their influence on one's plan, ensuring these values are conveyed through the planning process.

For example, discretionary trusts, popular for their flexibility, can be guided by a non-binding side letter of wishes that aligns with the planner's core values, explaining the reasons beyond tax benefits for setting up the trust. This helps trustees make informed decisions in line with the creator's intentions. Such letters can provide guidance on the usage of trust assets, like prioritizing education, and outline distribution circumstances.

The final, vital step is sharing the estate plan. This shouldn't be overwhelming but rather a gradual process, starting with basic estate and financial planning education, moving on to discussing the values that informed the plan, and eventually explaining the structures set up for wealth transfer. The conversation does not need to delve into specific amounts but should focus on the overall framework. Advisers can help anticipate questions and guide through any sensitive discussions. In essence, creating a values-driven estate plan and effectively communicating it over time ensures the fulfillment of one's wishes and the preservation of legacy for generations

Talley's team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today. 



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