Estate Planning Considerations Based on Generational Differences

Trusts and Estates | Mark J. Ackerman | Aug 10, 2015

Differences Between the Generations

By: Mark Ackerman, CPA

When we perform estate financial and asset protection, it is important to take into consideration generational differences. Each generation has unique characteristics. They tend to shape the planning needs and objectives of the individual client within that generation. Although “core” areas, such as the need to plan for disability and for death, there are significant differences between generations due to age, the influence of historical events and especially today, the influence of technology. We can break down generational areas with seven categories of time.

Depression Era –

Individuals in this segment “came of age” between 1930 and 1939 and their age today is between 94 and 103. Depression Era individuals tend to be conservative, compulsive savers, maintain low debt, and use more financial products, such as CDs versus stocks. These individuals tend to feel a responsibility to leave a legacy to their children. They tend to be patriotic, are oriented toward work before pleasure, have respect for authority, and hold an emphasis on moral obligation. They focus on the “we” over “me”, which in the more recent generations, is the complete opposite.

Post World War II –

Today, these individuals’ ages range from 70 to 87. This subset has had significant opportunities in jobs and education as World War II ended and a post-war economic boom struck America. However, the Cold War tension and the potential for nuclear war and other never before seen threats, have led to levels of discomfort and uncertainty. Members of the post-World War II subset value security, comfort, and activities in environments of which they are familiar.

Estate Planning Checklist of the Elder Generation

  • Transfer of Assets to Heirs
  • Living Wills/ Advanced Directives
  • Durable Powers of Attorney
  • Surrogate Declarations/ Medical Power of Attorney
  • Transfer of Business Interests
  • Death Tax Planning (Federal and State)
  • Gift Tax Planning
  • Retirement Distribution Planning
  • Grandchildren Planning
  • Wealth Preservation Planning

The “Baby Boom” Generation –

This subset is sub-divisional into two groupings having different attitudes and behaviors.

Boomer 1:

These individuals range from 61 to 69 years of age. This subset is bounded by the Kennedy and Martin Luther King assignations, the Civil Rights Movement, and the nation at war with Vietnam.

Boomer 2:

Individuals within this group were born between the years 1955 and 1964. They are between 51 to 60 years of age. This subset, possibly due to the events of Watergate, lost much faith in government. Economic struggles resulting from events like the oil embargo of 1979, reinforced the selfishness and a focus on self-help and skepticism of the media and institutions. A major event within this age group was the AIDS crisis. The youngest members of this subset did not have the benefits of the Boomer 1 subset.

Estate Planning Checklist of the “Baby Boom” Generation

  • Transfer of Assets to Heirs with “Strings of Control”
  • Guardianship Issues for Minor Children
  • Instructional Letters to Guardians
  • Living Wills / Advanced Directives
  • Durable Powers of Attorney
  • Life Insurance Planning
  • Retirement Asset Planning (Funding Trusts)
  • Potential Blended Family Issues
  • Beginning of Grandchildren Planning
  • Long Term Care Planning
  • Purchase of a second home

The “Next” Generations –

The “Next” Generations sometimes called the “me” generation can be divided into three specific groups:

Generation X:

Individuals within this group are 39 to 50 years of age. This is the first subset to be exposed to daycare and high levels of parental divorce. This group has the lowest voting participation rate of any of the generation categories. They often have a high level of skepticism. This subset is arguably the best-educated generation. This high level of education, together with a growing maturity had resulted in this subset forming families with a higher level of education and pragmatism then their parents did. There is a high concern over broken homes, children growing up with only one parent present, and financial planning.

Generation Y:

The individuals within this group are 31 to 38. This is the largest subset since Boomer 1 and they are incredibly sophisticated, very technology savvy, and are immune to most traditional motivational and sales pitches. Members of this subset are much more racially and ethnically diverse than prior subsets. This subset is influenced by the rapid expansion of cable TV channels, satellite radio, and the internet. This group was often raised in a dual income or single parent families. Approximately one out every nine people in this subset have a credit card co-signed by a parent.

Generation Z:

The individuals within this group are 3 to 20. Not much is known yet about this subset. It appears that this group is maturing in the most highly diverse social environment in the history of the United States. High levels of technology will make significant strides in academics. The members of this subset will be more internet savvy than their Generation Y predecessors.

Estate Planning Checklist of the Next Generation

  • Transfer of Assets to Heirs “Strings of Control”
  • Planning for Future Children
  • Guardianship Issues for Minor Children
  • Instructional Letters to Guardians
  • Living Wills / Advanced Directives
  • Durable Powers of Attorney
  • Life Insurance Planning
  • Purchase of a First home
  • Retirement Asset Planning
  • Wealth Creation Planning

Top Ten Year-End Tax Planning Checklist

As the year draws to a close, taking proactive steps in your financial planning can significantly impact your tax liability. This checklist provides a guide to key strategies that individuals can consider before the end of the year to potentially decrease their income tax. By strategically managing income, deductions, and investments, you can optimize your tax situation and position yourself for a more tax-efficient financial future.

Read More »