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Anyone who has thought about what to do with the wealth they've accumulated when they die has also thought about the cost of transferring that wealth. We all know we can't take it with us when we go, and we all go. Death is one of those "law of nature" things. Right now, Baby Boomers are in the middle of the greatest transfer of wealth in our nation's history ($59 trillion, according to the Center on Wealth and Philanthropy at Boston College), yet the savings/investing statistics for this generation are not good. Baby Boomers didn't start investing soon enough, didn't invest enough, and now it costs more per dollar to preserve what there is. OK, so I guess this generation just blew it.

Instead of wringing their hands and moaning, "woe is me", though, the Baby Boomers are already over it, and looking to the future. Now it's about the grandchildren.

The following article was written by Neale Godfry, and originally appeared September 30, 2014 on as "Retirees: 'Let The Force Be With You' (and Your Grandchildren)"

Albert Einstein is credited with saying that compound interest is “the most powerful force in the universe.” I would add that education combined with the miracle of compounding may be the real power we are seeking. Who can have this super-power? Baby Boomers.

TV personalities, bloggers and almost everyone else yells at us because we apparently didn’t get the message about saving for our future. Ok, we hear you. We may have blown it for ourselves, but it is not too late for us to do something now to protect our most precious asset: Our Grandchildren.

Even though the savings/investing stats are depressing, Baby Boomers are in the midst of the largest transfer of wealth that this nation has ever experienced. Center on Wealth and Philanthropy at Boston College originally estimated the transfer to be $41 trillion dollars. Now the estimate has climbed to $59 trillion.

I’m not hung-up on the exact amount; I’m fascinated about its significance and what this means to Boomers and their children and grandchildren. The huge numbers make us think that this is about money. I want you to consider that your legacy is not only about money; it’s about more than money. Isn’t the gift you want to pass on to the next generation, resulting from your hard work, really about who you are… about your values?

Let’s first talk about the money part and how you can act on Einstein’s words and make the miracle of compounding work for your loved ones. Your grandchildren have time on their side. Do the simple math. If you invest $50,000 for your one-year-old grandchild and earn simple yearly compounded interest at 6%, your grandchild will have over $2 million dollars by age 65. Now raise the interest rate to 8% annually and the number jumps to over $6.8 million dollars. I know we are not considering inflation and the future CPI, but the point is that today’s investing allows Einstein’s theory to take real shape. The other part of the miracle involves your connection with your grandchildren. Your legacy is about the values and life skills you want to pass on to your grandkids. They actually want to hang out with you. They think you are cool. Take advantage of them wanting to listen to you.

Of course, you are worried that your kids or grandkids may take their inheritance and indulge in sex, drugs and Rock ‘n Roll and may try to perfect the recipe for the next original designer martini. You lower the risk of that by really talking about and showing your offspring what money can and can’t do. You don’t want them to ever confuse net worth with self-worth. Talk about the responsibility that goes along with your money. It didn’t just happen… you earned it.

Get them involved in the charities and philanthropic activities that are near and dear to you. Tell them what you think is important… is it education, the arts, travel, religion, helping others? Show them. If your passion is building homes with Habitat for Humanity, take them along domestically or internationally to help build a home. I’ve travelled with my kids for years to all sorts of places, from Borneo to Papua New Guinea to Madagascar. Every trip includes a charitable element, which is either prearranged or set up via our guide. We have planted trees, read to homeless children and donated clothes and food to local charities, among other things. I allowed my kids to be empowered to make a difference, and the added benefit was that these experiences reduced the times I had to say, “You don’t know how lucky you are.” This all, hopefully may reduce the risk of your money going to buy the Ferrari as soon as your funeral is over.

Also, really discuss how you earned the money with your grandchildren. Take them to your office or explain what you do or did. Tell them the stories about the “good ‘ole days.” Show them the products you manufactured. This education connects them with the reality of how the money came to be. Subsequent blogs will address your intentions around the inheritance, meetings with financial advisors, conversations with family members and the emotional issues around money. I feel strongly that you must make sure that all family members understand your wishes prior to the wealth transfer.

By the way, the most expensive way to give away wealth is to die with it. You can’t take it with you. David Rockefeller, former Chairman of The Chase Manhattan Bank, summed it up really well. It was 2004 and I was hitting him up for a jacket quote for my recent book. We were talking about passing wealth onto the next generation and David said, “You’ll never see a hearse with a luggage rack.”  


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  Rogers Sheffield & Campbell, LLP

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