There's More to Legacy Than Money

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By Albert B. Crenshaw
Sunday, July 31, 2005

In the next several decades, this country is expected to experience one of the greatest transfers of wealth from one generation to the next that has ever taken place anywhere.

Estimates of how much money people will leave behind run as high as $150 trillion, but a more widely used number is $41 trillion. Of that, a number of economists think $25 trillion will be transferred directly to heirs. And much of it will be left to members of the baby-boom generation.

That vast sea of money may solve a lot of boomers' financial problems -- studies suggest that many are counting on it, perhaps unrealistically -- or it may not. But it does seem to give the older generation a lot of leverage and it is having a powerful impact on family dynamics.

In a survey by the big German insurance and financial services firm Allianz Group, several thousand U.S. boomers and their elders were asked how they think about themselves and the other generation, and what they expect to inherit. The survey found an interesting mix of pressure and neglect infecting intergenerational communication.

Large majorities of both generations said they were "highly confident" discussing legacy and inheritance, but when they were questioned more deeply, fewer than a third of both generations said they had talked about any of the issues that Allianz experts deemed essential in legacy planning.

Those key issues are: values and life lessons; instructions and wishes to be fulfilled; personal possessions of emotional value; and financial assets or real estate.

A fifth of boomers admitted they hadn't discussed any of those matters with their elders, and the survey data, along with focus groups, suggested that both boomers and their parents want to talk about more than the money.

"The big 'aha' is that it's more about this concept of 'legacy' than inheritance," said Mark A. Zesbaugh, chief executive of Allianz Life Insurance Co. of North America. Both generations, when asked about inheritance, spoke narrowly of money and death. "The word 'legacy' opened up floodgates of communication," he said.

If families can use that approach to improve communications, they may find it of great value. A failure to communicate can be costly on many fronts.

Despite Republican efforts, the estate tax is still very much alive, but it also is full of provisions that can be exploited by careful families to save a lot of money upon the death of a parent.

Further, estate-planning experts almost universally note that personal possessions and other items whose monetary value is modest at best are often the source of the bitterest family squabbles. Family members owe it to one another to decide who gets what while the elders are still around to make their wishes clear -- or to referee disagreements among their children.

Ken Dychtwald, head of Age Wave, a consulting firm involved in the study, said it found that "families were five times more likely to fight over who got Grandma's ring" than who got the money.


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© 2005 The Washington Post Company

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