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Millions of American families could soon be getting trillions of dollars in savings passed down from their parents and grandparents and financial analysts are wondering what they’ll do with it.
“I’ve seen it,” declared KTRH Money Man Pat Shinn. “Some will save it and be responsible. Some will blow it.”
As Americans born before 1965 leave their life savings to their heirs, numerous analyses estimate that they will be passing more than $100 trillion over the next two decades, the largest such generational transfer in history.
“Some of that money is going get saved. Some of that money is going to get spent,” Pat said. “Baby boomers, they did a pretty good job of saving and, as Baby Boomers pass away, record amounts of money is going to be passed down to their heirs. In fact, studies say, right now, today, roughly $2.5 trillion per year is being handed down.”
Pat urges parents planning to leave their assets to their kids to sit down with them and make it clear to whom the fortune is going.
He says talk with an advisor about the rules for IRA accounts, 401(k)s and trusts. He also says it can be important to keep any inheritance separate from family community property to be ready for any divorce divisions.
And some of that money, he says, will indeed be going out into the economy.
“When you inherit it, and you just get it dropped in your lap, some of it will get spent,” he said. “There will be an effect.”