Giving while living

The more money you have, the more afraid you are that you’ll outlive it.

That’s according to a Logica Research study – published by Schwab December 9, 2024 (all citations here are as of July 8, 2025) – which finds that most people with more than $1 million in investable assets believe their legacy will be “enough”. Those whose net worth exceeds $10 million, though, are more likely to “fear… they may be giving too much to their heirs.”

Even so, how much money you can pass along comfortably correlates with how old you are. Could it be that this distinction is not so much between the Haves and the Have Mores, but between the generations? Might Millennials have very different concepts of legacy as do Boomers and Gen X? Apparently yes, and it means we all need to rethink how we intend to pay it all forward.

We’re not the same

Most wealthy Americans have important wills in place, and roughly one-third have documented trusts or powers-of-attorney. They cite top wealth and asset protection, eliminating conflicts between the recipients, avoiding probate court and minimizing taxes as the top reasons for their financial planning.

Remarkably, seven out of ten of those surveyed want some say in how their wealth is used, such as setting an age at which the money can be accessed or specifying how the money can be spent. That includes nearly all Millennials and Gen Xers.

Of course, this involves placing a lot of faith in the courts and the kids. “Junior will get full-body tattoos over my dead body!” Yes, yes, he will. Perhaps that’s why Millennials and Gen Xers overwhelmingly prefer to still be alive when the money gets doled out. More than half of them “want the next generation to enjoy my money while I’m still alive” according to the survey, compared to only one in five Boomers.

And yet, the survey suggests that these individuals, regardless of age, might not be aware of all the tax implications of gifting versus bequeathing. While most of them understand income tax and estate tax, they are largely uninformed about gift taxes and generation-skipping transfer taxes.

Available options

There are basically four ways of transferring ownership of assets to heirs while still drawing breath:

1. Gifting, or directly transferring assets to beneficiaries

2. Joint ownership, which adds a beneficiary as a joint owner of an asset, allowing them to inherit the asset upon the owner’s death

3. Transfer on Death designations, or TODs, which name beneficiaries for such specific assets as investment accounts, or collectibles

4. Trusts, which manage and distribute assets to beneficiaries

All of these avoid wills, probate and all that legal rigamarole. They also sidestep the federal estate tax, sometimes called “death tax” which we discussed in this space on January 27. These kick in if the estate exceeds $13.99 million this year, according to an IRS posting dated October 29, 2024. (The Big Beautiful Bill, signed into law July 4, will likely have a profound effect on this threshold, as we will discuss in a subsequent post.)

Gifting is popular because it can pay for beneficiaries’ current expenses, according to a SmartAsset article dated November 6, 2024. This is true especially if these expenses involve such big-ticket items as education or health care.

Another option, according to SmartAsset, is to change the deed of your property so that your beneficiary shares legal ownership. By creating what’s called a “joint tenancy with rights of survivorship,” your passing will be a non-event – at least as far as the house is concerned.

There’s one big caveat to joint tenancy, though: Your heir’s creditors become your creditors. You might find that they have recourse to your home, and that’s where the TOD option comes in. Under a TOD, the inheritor doesn’t own any part of the home until after your death, so no bill collector can come after it.

Trusts are complicated, and we urge you to talk to a lawyer if you want to go down this road. But SmartAsset provides this nutshell version:

• A living trust puts the assets in the trust’s name and adds your heirs as beneficiaries. This means that the assets go to your beneficiaries upon your death.
• A revocable trust allows you to place assets in the trust, then decide how they’re to be distributed when you die. And you can keep changing your mind up until that day if your family dynamics require that degree of freedom.
• An irrevocable trust is widely deployed by individuals who believe they might face excessive end-of-life medical costs. As we discussed here on May 20, 2024, this arrangement reduces the value of your estate by transferring the assets to a beneficiary, enabling you to qualify for Medicaid and still pass wealth along to your family. Medicaid, however, requires an irrevocable trust to be in place for five years before the transfer takes place. While it’s not as “irrevocable” as the name implies, switching beneficiaries is a lawyer-intensive process.

At the close

Do generations even matter?

A lot of us here at Smith Anglin Financial consider all this talk of “Millennials” and “Gen X” and “Boomers” to be no more relevant than zodiac signs. We see individuals who have amounted to something in worldly terms wishing to provide for the people they love and causes they embrace. Their date of birth tells us nothing about them except the legal structures and technological environment at the time they came of age. Those factors do, of course, have a profound impact on their society which, to some extent, will form some of their perceptions and habits.

At root, though, there’s no difference. We observe and acknowledge these changes in preference and can help our clients position their financial portfolios for however they choose to pass them along. Please contact us to discuss how to best meet your desired outcomes.