Repeal of the Estate Tax & the Legacy of the Baby Boomer Generation
Much has been said about the Baby Boomer generation’s lack of retirement saving. There can be no doubt that this issue will continue to be important. An equally important but less cited issue is what will happen to the wealth that the Boomer generation has acquired. The reality is that the boomer generation has amassed a huge amount of wealth. This wealth is going to eventually pass to the government or the next generation of Americans. This transfer of wealth will have a dramatic impact on our overall financial health and it will dramatically impact American society.
While it may not currently be a popular notion, passing wealth to the government might just be the best option available to Boomer generation. The statistics vary, but the size of the Boomer’s wealth should be more than enough to eliminate all or a large portion of our national debt (the national debt is currently at about $7 trillion and many beleive that Boomers currently hold $10 trillion in wealth). From a policy perspective, it only seems fair that the generation that created a large portion of, and benefited the most from, the national debt should pay for it. Accomplishing such a feat could be the best legacy that the Boomer generation could ever hope to leave. The Boomer generation’s indifference towards estate planning helps ensure that this will come about. However, that assumes that the estate tax is not repealed. If the estate tax is repealed, then more of the Boomer’s wealth will pass to the next generation of Americans.
The consequences of such a large transfer of wealth to one generation could be disastrous for American society. One only has to think of the problems associated with today’s stereotypical trust fund kid to see what American society will look like in the future. It is time to ask whether we really should be creating an America where a large portion of American society is composed of trust fund kids. We must explore issues such as what impact this population will have on the traditional American society. Will the traditional American independent do-it-yourself hard working and innovative spirit succumb to a society focused on leisure and self-entitlement? Will this passage of wealth only serve to widen the gulf separating the have and have-nots?
Wealth holders may be able to reduce the consequences of this wealth transfer by taking steps now to prepare their beneficiaries to receive their wealth. This preparation would need to include teaching inheritors the financial and life skills necessary to cope with wealth. It is probably a fair statement to say that most Americans are not comfortable with or able to provide this type of service. In fact, most estate planning professionals are not able to provide this service. By way of example, think of the estate-planning attorney that goes to great pains to pass as much wealth to the next generation as possible, but does nothing to prepare the next generation to handle the wealth.
Wealth coaches, who provide a combination of financial and life coaching services, may be able to help wealth holders address these issues. The financial industry follows the money, so we can expect that the number of wealth coaches offering these services will increase in proportion to the amount of wealth that passes from the boomer generation to younger generations. If brought in early in the beneficiary’s life, these wealth coaches are in a position to "un-trust fund kid" inheritors before they actually receive their wealth, facilitate the transfer of wealth from one generation to the next when the time arises, and oversee the inheritor after the wealth holder is gone. The only question remaining is whether the current wealth holders will employ wealth coaches to help the lower generations. The boomer generation’s lack of estate planning and retirement saving tends to indicate that they will not.
When these issues are considered it appears that the estate tax should not be repealed. Instead, we might need to start thinking about increasing the estate tax rate to something closer to 100% -- or higher.
While it may not currently be a popular notion, passing wealth to the government might just be the best option available to Boomer generation. The statistics vary, but the size of the Boomer’s wealth should be more than enough to eliminate all or a large portion of our national debt (the national debt is currently at about $7 trillion and many beleive that Boomers currently hold $10 trillion in wealth). From a policy perspective, it only seems fair that the generation that created a large portion of, and benefited the most from, the national debt should pay for it. Accomplishing such a feat could be the best legacy that the Boomer generation could ever hope to leave. The Boomer generation’s indifference towards estate planning helps ensure that this will come about. However, that assumes that the estate tax is not repealed. If the estate tax is repealed, then more of the Boomer’s wealth will pass to the next generation of Americans.
The consequences of such a large transfer of wealth to one generation could be disastrous for American society. One only has to think of the problems associated with today’s stereotypical trust fund kid to see what American society will look like in the future. It is time to ask whether we really should be creating an America where a large portion of American society is composed of trust fund kids. We must explore issues such as what impact this population will have on the traditional American society. Will the traditional American independent do-it-yourself hard working and innovative spirit succumb to a society focused on leisure and self-entitlement? Will this passage of wealth only serve to widen the gulf separating the have and have-nots?
Wealth holders may be able to reduce the consequences of this wealth transfer by taking steps now to prepare their beneficiaries to receive their wealth. This preparation would need to include teaching inheritors the financial and life skills necessary to cope with wealth. It is probably a fair statement to say that most Americans are not comfortable with or able to provide this type of service. In fact, most estate planning professionals are not able to provide this service. By way of example, think of the estate-planning attorney that goes to great pains to pass as much wealth to the next generation as possible, but does nothing to prepare the next generation to handle the wealth.
Wealth coaches, who provide a combination of financial and life coaching services, may be able to help wealth holders address these issues. The financial industry follows the money, so we can expect that the number of wealth coaches offering these services will increase in proportion to the amount of wealth that passes from the boomer generation to younger generations. If brought in early in the beneficiary’s life, these wealth coaches are in a position to "un-trust fund kid" inheritors before they actually receive their wealth, facilitate the transfer of wealth from one generation to the next when the time arises, and oversee the inheritor after the wealth holder is gone. The only question remaining is whether the current wealth holders will employ wealth coaches to help the lower generations. The boomer generation’s lack of estate planning and retirement saving tends to indicate that they will not.
When these issues are considered it appears that the estate tax should not be repealed. Instead, we might need to start thinking about increasing the estate tax rate to something closer to 100% -- or higher.
 
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