Multigenerational Estate Planning

Helping Clients Preserve Generational Wealth

Every family is special and has its own unique dynamics, relationships, goals, and needs. Traditional estate planning generally focuses more narrowly on your own assets and direct heirs. Multigenerational estate planning takes a broader view, with the purpose of ensuring that your legacy can live on for generations to come and make an impact on the lives of your family members long after you’re gone.

If your goal is to preserve your wealth and legacy for generations to come, you need the knowledge and experience of a multigenerational estate planning attorney. They can work with you to design an estate plan that fits your needs and goals and ensures that your assets and legacy are passed down to your loved ones. Contact the office of MMZ Law to learn how to prepare for your family’s future.

What Is Multigenerational Estate Planning?

Multigenerational estate planning is still estate planning involving things like trusts, wills, and transfer of assets, but it focuses on ensuring that the financial decisions you make can have a positive impact on your family’s current and future generations. Many people approach estate planning only thinking about their direct heirs, such as children, but multigenerational estate planning also considers grandchildren, great-grandchildren, and how assets can be best managed for everyone involved.

For example, multigenerational estate planning may involve adding a provision to the terms of a trust that reserves some of the money you leave your children to pay for your grandchildren’s education. Other examples might include using a multigenerational IRA, having a generational business succession plan, or leaving instructions for multiple generations to take part in the upkeep and enjoyment of a family vacation property.

What Should a Multigenerational Estate Plan Involve?

A solid multigenerational estate plan should include the standard last will and testament, which is the building block of all estate plans. In this document, you can list your assets and the plan for how they should be distributed among your beneficiaries, including future generations. Trusts are also often a major component of multigenerational estate planning because they make it easier to leave detailed instructions for contributions toward current and future generations that must be legally followed.

For example, a dynasty trust is a long-term trust that is designed to be used for several generations. Each state has its own rules regarding how long a trust can be in place before it must be terminated. In California, this length of time is limited to 90 years. This means that a trust could contribute toward the lives of your children, grandchildren, and even possible great-grandchildren before it would be forced to end.

Another type of trust that may be used in multigenerational estate planning is a generation-skipping trust. As the name suggests, these trusts have the assets passed down to the grantor’s grandchildren instead of directly to their children, which can ensure that the next generation is provided for and help reduce certain tax obligations.

These types of estate planning tools can be complicated, and it’s important to understand the purpose of any tool you use in your estate plan and its pros and cons. Consult an estate planning attorney before committing to a trust or formalizing any financial plans.

How Can I Avoid Estate Taxes?

One of the major goals for many people in estate planning is to lower the amount of estate taxes as much as possible. There are several strategies that can be used to reduce the estate tax burden, but one of the most common is an irrevocable living trust. Assets in irrevocable trusts aren’t part of estate taxes because the grantor loses control over the assets at the time of the trust’s creation.

There are also provisions that allow for some of your assets to be gifted to children or grandchildren without having to pay taxes on the money. There is an annual limit on how much can be gifted per recipient, and this can change as factors like inflation come into play. As of 2023, this limit is $17,000 per year per recipient. If you are able to gift this amount for several years, it can substantially reduce the amount of estate taxes that otherwise would have had to be paid on that amount if it remained a part of your estate.

What Are the Benefits of Multigenerational Estate Planning?

The benefits of multigenerational estate planning are wide and varied and can change depending on how the estate plan is structured. But in general, multigenerational estate planning provides the following benefits:

  • Wealth preservation: Focusing on multiple future generations in your estate plan helps ensure that your legacy and financial provisions are able to be enjoyed for decades to come. This can also help your heirs gain or maintain financial stability, which can have a significant positive effect on their quality of life.
  • Reduced tax burden: The less taxes that have to be paid out of your estate, the more there is to be dispersed among your heirs.
  • Maintaining control of assets: Comprehensive multigenerational estate planning allows you to create an estate plan that satisfies your goals and objectives when passing down wealth.

When it comes to multigenerational estate planning, it’s not just about crunching the numbers or valuing assets. It’s also about the emotional legacy you leave behind by being able to provide for future generations, whether that’s through paying for their college education or passing down family homesteads. If you live in Claremont or the surrounding area and need help developing a multigenerational estate plan, call 909-347-7444 to speak to one of the team members at MMZ Law.