Baby Boomers Heading for Windfall From Parents' Investments : Finances: The postwar generation, not known as savers, will inherit trillions from elders' accumulated wealth, economists say.

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They were born of the Great Depression, started families in the prosperous '50s, and watched the value of their homes and stock portfolios skyrocket in the last two decades.

Now, the parents of the postwar baby boom generation, many of them also receiving generous retirement benefits, are poised to pass on their accumulated fortunes to less-fortunate next of kin.

Economists estimate $8 trillion in collective net wealth will transfer from one generation to the next over the coming 20 years, the largest movement of inherited wealth in the nation's history.

That's a bit of poetic justice, some might say, considering that same parental generation helped amass the nation's largest debt load, now at around $4 trillion.

Signs of a financial shift already are visible. Some parents, for example, lavish gifts on adult children, enabling them to make a down payment on a new house or start a business.

Edward Wolff, an economics professor at New York University who has studied the net worth of Americans among different age groups, has estimated that 80% of the wealth of the average baby boom family comes from gifts or inheritance.

By contrast, nearly all the wealth of seniors comes from savings or capital gains on investments, Wolff said.

"Baby boomers are very poor savers. . . . For some people this will be manna from heaven. They may get inheritance from a relative they've never heard of. But others who might be counting on money may find their inheritance depleted," from health care or other living expenses, said William Strauss, co-author of "Generations: The History of America's Future, 1584 to 2060."

Going strictly by mathematics, the anticipated windfall works out to roughly $50,000 per baby boomer family, Wolff said. But the inheritance bounty won't fall evenly on this postwar generation. Three-quarters of the nation's assets are held by the wealthiest 20% of families.

"Minorities will probably receive the least inheritance," Wolff said, noting that the wealth of nonwhites is on average about a third of the wealth of whites. "It will exacerbate the inequalities among the baby-boom generation between blacks and whites."

Professional advisers say estate planning should be just one part of a family's overall financial-planning picture, along with preparing for education costs, insurance needs or retirement.

"There are many people who don't understand the extent of the family wealth," said Jeffrey Lowin, who heads the trusts and estates division at the New York law firm of Reid & Priest. "Ideally, parents should sit down with their children to prepare for the nature of their inheritance . . . so the children can do their own planning."

Broaching such a subject, however, isn't necessarily easy.

Even Martin M. Shenkman, a Teaneck, N.J., lawyer and author who advises people on estate planning, can attest to that.

Although he's prepared hundreds of trusts and wills over the years, he said he had trouble recently helping out his own father.

"My dad had been asking me for two years. He finally said, 'If you don't do my documenting, I'm going to pay someone else to do it,' " Shenkman said. "You don't feel comfortable talking to your parents about what happens when they die."

Such reluctance can be found in both generations. A recent investor poll by Prudential Securities found that more than a third of those 55 and older said they had not yet discussed estate plans with their children.

Such was the case with Fred Giordano, 60, a retired construction worker, after his father died 10 years ago. He said he and his three older sisters squabbled over money and control of the family home because his parents' wishes weren't clearly known.

He and his wife Joan, 56, recently established a comprehensive plan aimed at preserving and distributing their estimated $1-million estate between their adult son and daughter.

The consequences of poor planning can mean the difference between a loving legacy that provides years of financial security and a perpetuating nightmare of tax liabilities, family rivalries and business problems.

For one thing, the taxes can be enormous. While there's no limit to how much spouses can leave each other without paying federal estate taxes, the Internal Revenue Service taxes anything exceeding $600,000, or $1.2 million for a couple filing jointly, that's left to everyone else.

The tax rate ranges from 37% to 55%, but could easily exceed 60% when some state and local taxes are added.

"When you combine a life insurance policy, pension assets and houses . . . you may find you are worth a lot more than you realize," said Shenkman.

Tax experts maintain that most Americans can avoid any estate taxes or significantly reduce their liabilities with the right planning.

One way, they say, is for parents to make regular gifts. The IRS allows you to give away $10,000 a year, tax-free, or $20,000 per couple, to each of as many people as you like.

Other alternatives include establishing a trust to help shelter some estate money or taking out a "second-to-die" insurance policy to provide survivors with money for estate taxes, debts and administration expenses.

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