Legacy Planning – Good Idea or Bad Idea?

I recently saw a post on a financial forum I follow that said: “The Tax Law That Could Make Your Grandchildren Super Rich”.

The sales pitch explained: “the law for ending the $100K income limit on Roth conversions, coupled with the $5.25 million exemption, has attracted many high net-worth investors. A $5 million Roth IRA, left to a 1 year old grandchild, life expectancy of 81.6 years, earning 8%, would pay out an income of $408 million- completely free of estate, gift, income and capital gains taxes”.

Here is my question and our quandary when collaborating with families that could do this; what would that do to the grandchild?

Would getting that much money without ever having to work, study, focus, plan, worry or strive be better or worse for that child?

Does it even need to be that much money before it could have a negative affect rather then what we might intend?

Should good financial and estate planning focus on more than maximizing who gets what?

We think so. This is another area we think it’s important to Shepherd Your Wealth®.

About Dave Shepherd, ChFC, CFP®

Dave is the founder of Shepherd Wealth & Retirement in Tucson, Arizona. Dave is a Chartered Financial Consultant (ChFC) and Certified Financial Planner™ practitioner (CFP®). Have a financial question? Click Here to contact Dave Shepherd.

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Investment advice offered through Shepherd Wealth Group, a Registered Investment Adviser doing business as Shepherd Wealth & Retirement.

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