With more than $84 trillion in assets set to change hands over the next two decades, financial advisors and their clients are sitting on the precipice of the greatest transfer of wealth in history.

Financial advisors are best positioned to help their clients engage in meaningful conversations about the finances of aging parents. They also help clients with their wishes for what's given to the next generation. Whether your clients are the children of aging parents or the parents themselves, these conversations are as integral to preserving your clients' wealth as the long-term financial planning that built up that wealth in the first place.

Your Role as an Advisor

While some of the discussions below might seem outside of a financial advisor's typical role, you must help your clients' families consider the future. As an impartial third party and financial expert, you offer an invaluable perspective that can help your clients understand how other families have handled these issues.

"We've seen too many families make the same mistakes generation after generation," said Mitchell Kraus, a certified financial planner and principal at Capital Intelligence Associates in Santa Monica, California. "Our goal is to not only help our clients leave a financial legacy to their children if they choose, but also to ensure their children are ready to receive it and use it responsibly."

Your knowledge and perspective can make you an excellent facilitator of these often difficu♓lt family discussions and can help you cultivate relationships 𒉰with the next generation of the family.

"We have experience in helping clients run family meetings," Kraus said. "Getting everyone on the same page creates opportunities to create greater family wealth by coordinating family goals, taking advantage of different tax brackets, and looking for effective ways to transfer money across generations."

From a business perspective—especially if the parents are your clients—forward planning with multiple stakeh🐬olders may also be the key to a longer, intergenerational relationship. Engaging with clients regarding the transfer of wealth is key to building trust and helping families cope with this delicate and difficult issue. Below are some of the major issues to consider.

What Are the Parents' Wishes?

As Leo Tolstoy wrote in the opening of "Anna Karenina," "All happy families are alike; each unhappy family is unhappy in its own way." Thus, while each situation will be unique, you can stave off the more difficult wealth transfers by ensuring the parents' expectations for their money are clear to all before their death.

Ideally, they'll set out the distributions when they've done their will, other estate documents, and beneficiary documents. If your clients don't have a will and other estate paperwork, they're not alone: a Gallup poll found that less than half of American adults have one. A 2024 study found that only 26% have an estate plan.

Without wills and estate plans, it's difficult for families to determine a parent’s wishes for their estate. While a trust and estate attorney should draft a will, you should be aware of your clients' wishes and, if possible, encourage them to develop a plan for their estate that makes sense for their situation. They should also keep it updated regularly, especially after significant life events. 

Your clients' children and other beneficiaries should be aware of these documents and, if the client is comfortable with such a discussion, about where the money will go. Even in the presence of ironclad estate documents, nasty surprises in this area in the wake of a death can often result in damaged relationships and expensive litigation.

"For most families, the best way to ensure there aren't fights after death is to have cross-generational conversations," Kraus said. That way, "the parents have a chance to resolve them while they are still alive. For more dysfunctional families, we recommend professionals who will run family meetings to ensure things do not get out of control."

Consider Family Dynamics

Talking about death is never easy, though many people may prefer it over talking about their wealth. A Merrill Lynch/Age Wave study found that 61% of women surveyed would rather talk about their deaths than their finances.

As a financial advisor, it's your responsibility to start the conversation. Think about your previous exchanges with the family: do they communicate openly about their wealth? If the answer is no, then one of your goals as an advisor should be to make these types of discussions comfortable for all involved. This may take some time, which is entirely normal.

Are the parents closer with one child in particular? Does one child tend to take the lead? Families need to decide who will help the parents with financial issues as they age and what everyone's role will be.

"The biggest stumbling block is often older generations not wanting to address the fact that there might be problems," Kraus said. "One must know their family well enough to know what can be discussed and the best method to do it."

Consider issues such as a 澳洲幸运5官方开奖结果体彩网:power of attorney or backup contact on financial decisions shou👍ld the parents be incapacitated or otherwise unable to manage their affairs. If a child or family member is unprepared to a🍃ssume this role, you can help the parents find an outside professional to assist.

Lastly, 澳洲幸运5官方开奖结果体彩网:financial elder abuse is also something to keep an eye on. While many scams are done by outsiders, abuse from family members or caregivers is unfortunately common. You'll need to keep this possibility in mind and report any abuse you witness to the proper authorities.

Ensure There Is an Inventory of Assets

Ideally, the parents have a handle on everything they own. Perhaps they use an online financial organizer or save statements from various investment, bank, and retirement📖 acco🌸unts. This list should include the following:

• Real estate: both the primary residence and any investment or recreational properties
• Retirement accounts such as individual retirement accounts, annuities, and 401(k)s
• Insurance policies
• Pension benefits
• Interest in a business
• 澳洲幸运5官方开奖结果体彩网:Social Security or railroad retirement benefits
• Art or collectibles
• Checking and savings accounts
• The location of safety deposit boxes

Your priority should be ensuring that the parents and relevant family members are in the loop regarding their parents' assets.

Can the Parents Provide for Their Own 🌞Retirement?

Many Americans aren't sure they can provide for themselves in retirement. About four in 10 Americans between 45 and 59 and 45% of those over 60 report not being on track with their retirement savings, according to a 2024 U.S. Federal Reserve report.

While some assistance programs can help close that gap, many children are forced to step in and provide financial aid for their parents as they age. Children and parents must design a financial plan accommodating each others' needs and expectations.

Fidelity advises those planning for retirement to assume they will spend between 55%-and-80% of their present income in their retirement years. Depending on whether the person or persons retiring will lead an active lifestyle or travel, that percentage guideline can rise to 90%, 100%, or more.

Long-Term and End-of-Life Care

While Medicare can help with many health expenses, retirees must cover about 35% of their medical costs on average. According to the National Bureau of Economic Research, that amounts to more than $18,000 annually, including end-of-life care.

Do the parents have long-term care insurance? If they don't, is it reasonable for them to buy it, given their age, health, and cost? Otherwise, are they in a position to self-insure? While planning for retirement expenses can be daunting, discussing medical costs is essential long before the need arises.

The Bottom Line

Discussing end-of-life events is almost always tricky, which is why many retirees procrastinate on it until it's too late. Nevertheless, as Stephen Maggard, a certified financial planner at Abacus Planning Group in Columbia, South Carolina, put it, "The most successful transfers are where the plans are communicated early on with those inheriting the wealth."

Your role as a financial advisor is to provide a comfortable and nonjudgmental atmosphere🃏 where you can have frank but productive discussions about what will be set in motion when the inevitable occurs.