I made a post about the difference between assets transferred by beneficiary designation vs a will (some seemed to be confused about that), how high net worth individuals avoid (or minimize taxation) by taking loans on assets rather than realizing gains and leveraging the step up basis rules to transfer assets etc.
Also, if people are concerned about beneficiaries who become mentally incapacitated, they could designate power of attorney and if you’re concerned about beneficiaries who spend too much money, consider spendthrift trusts.
Nothing I post should be considered tax, legal, or financial advice. Please consult with your own financial professional.
I should clarify. Because they have assets, they are able to get loans and therefore avoid having to sell their investments and creating a taxable event. The loans are backed by their assets.
Nothing I post should be considered tax, legal, or financial advice. Please consult with your own financial professional.
Curious what the definition of high net worth is? Someone with >$2M is probably in the top 2% but can’t imagine having such access to such low cost debt options.
I’m still hoping someone will leave me money. I think the chances are about the same as my winning the lottery.
My kids are doing okay financially. Better than me. They’ve traveled more than I have, one has a nicer house than I ever did. I hope that I have something left when I die, but it will be a bonus to them, not a life-changing amount.
@Fallgirl, I agree with you – S1 is in the tech field and there is ageism and turnover there. No guarantees that he’ll continue to do very well financially, though he is an extremely good saver. I also don’t like the underlying message to S2 that he gets more because he’s not as financially successful (but is doing work that’s incredibly important). Also don’t like that if there are progeny down the road, the current split is unfair to those grandchildren. H is the one who’s pushing the different distribution percentages. H has set it up that way for his 401k, with S1’s approval, but it bothers me tremendously. I know how quickly life can change.
We are joint on everything else, so those are the hills I will die upon and insist on 50/50. My IRA will be 50/50 and my small personal account will be split 50/50 after a couple of specific bequests.
According to Schwab’s 2023 Modern Wealth Survey, its seventh annual, Americans said it takes an average net worth of $2.2 million to qualify a person as being wealthy. (Net worth is the sum of your assets minus your liabilities.
Crazy to me because I don’t consider $2.5 million wealthy. Well off I suppose - but not wealthy. But of course those definitions are very subjective.
Per Kiplingers
People with the top 1% of net worth in the U.S. in 2022 had $10,815,000 in net worth.
And the financial advisors aren’t going to manage your 401K, unless you transfer into an IRA - and the article is written from the eyes of financial advisors / wealth managers.
Back to topic- we have recently updated our wills. Both kids are doing well financially and we have always treated them equally. That is what we want and each is left equal amounts, even though tragedy befell a member of one s’s extended family that has placed significant pressure and responsibility on s/dil (which they are happy to help with). Point is, even when we are fortunate to have successful, independent kids, stuff happens that can affect their lives in many ways. We are able to help in ways besides financial- flying out frequently and watching our grandkids to give the s and his w time to take care of themselves and/or their extended family. These aren’t things one ever expects to, or plans on happening, but they do. Count your blessings if they don’t happen to/in your family.
A couple of years ago I looked at changing the percentages for the beneficiaries on my 401k accounts. It was very easy to do on the T Rowe Price account online and I could give any percentage to anyone I wanted (I don’t have a spouse/ ex spouse and if I did it might have been different). However, on my TSP (govt) account, it was a lot harder to list a beneficiary or change the percentages if I wanted to make those in a certain category (for example, my children) get different percentages. They would have had to send me a form, I would have had to have them sign (I think that was it) and have it notarized and send it back. Their names aren’t even listed, just ‘children.’ I decided it wasn’t worth it, so just left all the accounts as 50/50 (I have two children). The exception is my bank accounts as the bank also won’t take different beneficiaries for different accounts (like a CD v. a savings account). I left that one as it was (oldest daughter) and told her to share with her sister.
My parents left no money and the only thing titled was a car. The DMV allowed my sister, who had power of attorney, to transfer it to me. Honestly, I think they let it slide because it wasn’t worth that much and we all (sister, mother, and me) had the same last name so they didn’t think we were defrauding anyone). I’ve learned here on CC that a car title can list a transfer on death so I will make sure to title any future cars that way so my kids can just transfer it without probate.
Just to point out differences in the ways families do and can do things…it is surprising to me on this thread - and over the years on CC - seeing people post they hope/plan to pay for grandchildren’s college expenses. I’ve just never heard of that in my life! What a gift but it’s one I can’t fathom!
I mean, our parents bought savings bonds for our kids when they were young at birthdays and such with the intent for it to be “for college” - but we were talking $50 here, $100 there.
We don’t have grandchildren yet, but our thought is our 3 get the $$ whenever that is and it’s up to them how they use it - individually, for their family, for charity - whatever.
We started a 529 for oldest grandkid, but our kids ultimately said it might be better to let them put the $ we would have deposited into their 529s they set up for their kids. So we dropped setting them up for the grands. With the way college costs are climbing, who knows what college will cost and how affordable it will or will not be by the time those little ones are college age!
