This past weekend I have been plagued with decisions about what to keep and what to throw out as I plan my move to tax-haven Florida. Many of those decisions have been around items I have received from my parents and grandparents in the past. None of these things will match the décor of the new home. Should I really pay to move them? Will they have any meaning to my children? Should I just dump them since they really have only sentimental meaning and relatively little value? One item in particular is a navy blue teapot shaped like Aladdin’s lamp that my Dad gave to my Grandmother on the first Mother’s Day in which he had a paycheck. Means a lot to me … but to my kids … nah.
This was just one of the items I chose to keep when we were settling my grandparents' estate. (As the only family member with a law license, I was asked to help supervise the distribution of assets.) Each grandchild was allowed to choose one item. My oldest cousin chose the expensive antique baby high chair and caused some hard feelings among some family members but oldest to youngest seemed to be the fairest way to conduct the process.
Have you ever been involved in settling a parent’s estate? Or even the estate of a grandparent? Did you find the process easy? Or was it messy? Perhaps contentious? Because many Baby Boomers have been involved in assisting their parents in the process of planning their estates or have actually helped to settle the estate once a parent or loved one has passed, Spectrem thought it might be helpful to understand how well the process went and what they might have learned from it. The research was conducted with Baby Boomers with a net worth of $1,000,000 plus who received an inheritance of at least $500,000.
Eighty six percent of inheritors were not surprised by their inheritance and almost all received the inheritance from their parents. Surprisingly, they were only marginally involved in the planning process rating their involvement on a 0-to-100 point scale, with 100 be “very involved” and 0 as not involved, at only 40.34. It’s interesting to note, however, that 77% of the assets received were liquid assets and only 23% were illiquid assets, the bulk of which were private residences. Thirty percent kept all of the illiquid assets, 42% kept some and sold some while 28% sold all of the illiquid assets. Almost a third of inheritors indicated they had to be involved in the sale of the primary residence of the estate.
Despite the fact that only 30% of Baby Boomers kept the illiquid assets from the estates they inherited, they believe that their children are more likely to keep the illiquid assets that will be passed to them. After all, Baby Boomers have much cooler stuff than the WWII generation had! On a scale of 0-to-100, with 100 being “Likely to retain” and 0 being “Likely to liquidate”, Baby Boomers rated the likelihood of their children keeping their illiquid stuff at 45.29. Additionally, on a similar 0-to-100 scale, Baby Boomers scored the likelihood of their children working together to determine how to liquidate their assets at 65.53. Maybe their children are older or more mature than mine. My children range from 16-27 and the likelihood they will agree on anything at this point is very low. (Of course, the likelihood they will want any of my illiquid stuff is even lower.)
So, should I keep the blue Aladdin teapot? It’s small. Won’t cost much to move. Maybe I will tell the story to my children multiple times and my youngest (currently the nice one) might like it. They are probably more likely to keep the blue Aladdin teapot from the 1950’s than my disco albums or Donny Osmond sweatshirt from the late 1970’s.
Overall, Baby Boomers have learned something from the inheritance process. Almost half plan to only leave liquid assets to their beneficiaries.
For more information on inheritances, check out our new study Legacy 2.0: Baby Boomers and Inheritances.
© 2019 Spectrem Group