Life Insurance for Generations X, Y, Z

The Affordability of an Inheritance

The Great Wealth Transfer is on the horizon with over $100 trillion expected to be passed from Baby Boomers to Generations X, Y, and Z by 2048. This multi-year event will prompt a lot of estate planning in its wake with each generation having its own approach towards inheriting wealth and structuring their financial planning. With these thoughts in mind, it can be advantageous to get started with financial planning now for the future of these generations.

As younger generations receive their inheritance, they are consequently charged with continuing their family’s legacy.   An estimated 62% of The Great Wealth Transfer consists of real estate and property, which will need to be maintained after it is inherited if it’s expected to remain in the family, with property taxes, upkeep, and insurance costs to consider.  The younger generations carry more debt than older generations with 56% of Gen Zers living paycheck to paycheck.  Without proper planning and guidance, the younger generations might be inclined to sell a priceless heirloom to pay off their debt.

It's wise to consider a strategy to make inheritance affordable for the next generation.  The Rockefeller family implemented a strategy using irrevocable trusts and life insurance policies to protect their wealth.  Each family member implements permanent life insurance funded by an irrevocable trust.  The policy’s cash value can be accessed for expenses during their lifetime, and the death benefit is paid to the trust at their mortality for future generations to use.  They are able to accumulate tax-deferred wealth, create tax-free income, and protect their assets from estate taxes and lawsuits by keeping them outside of their estate.  In 1937, John D. Rockefeller left behind approximately $26 million ($600 million in today’s money) and the family has grown that inheritance to $10.3 billion over 200 family members.

Building a plan that nurtures the continuance of a family legacy can be a large endeavor, but families become more complex and fragmented over time and an intentional strategy can be the difference between squandered wealth and an enduring legacy.  Cross-generational communication is key in these instances to establish accountability, expectations, and a shared purpose.  We are well-versed in helping families use life insurance to build their legacy from the ground up and are happy to start these conversations with the ultra-affluent families that we encounter.

Contact us with any questions or opportunities to help you or your clients achieve identified goals. This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.