.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 10px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 10px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 10px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} More people are looking at how to pass their wealth on to the next generation as they begin to manage more of their retirement funds. For most Iowans, this includes looking at how to pass on the family business, limit children’s inheritances and donate to charities through means such as gifting, life insurance and trusts.

The Baby Boomer generation is the first to consider wealth management across a broader population, as company pensions and Social Security coverage that expired at death are being replaced with 401(k) plans, Individual Retirement Accounts and personal wealth accumulation, said Mary Terry, a financial adviser with Ameriprise Financial Services Inc. who has 25 years of experience.

“I’m finding more and more of my clients as a percentage are falling into the category where estate taxes are going to be a major issue in their passing,” she said, especially as people accumulate more than $1 million, with the idea that they will live longer after retirement.

Yet, wealth managers say many of their clients are reluctant to talk about passing on wealth.

“Their primary concern is ‘what can I do to make sure that it lasts my lifetime,’ and a lot has to do with the fact that if you’re retired in your 60s and are living into your 90s, that’s 30 years of needing income,” Terry said.

Others are concerned about passing too much wealth on to their children.

“There seems to be a rise in the concern that we can pass on too much to kids and then remove incentives for them to lead productive lives and then what happens to the grandchildren in those situations?” said Stephanie Sarcone, a wealth management specialist at the Wells Fargo Wealth Management Group in Central Iowa. As a result, she said she has seen an increase in incentive-based trust provisions, where children will receive a distribution of a trust based on their income level.

“In some cases kids don’t even know what’s there,” said Jim Urbanek, regional manager for the Wells Fargo Wealth Management Group in Central Iowa. “They don’t share that information with their children for fear it will somehow change the way they approach their own lifestyle.”

With Iowans’ entrepreneurial spirit, Urbanek said, many clients also have businesses and need to determine whether to sell or pass them on to the next generation, and consider how to compensate children who may not want to be a part of the business versus those who do.

Issues like this make it difficult to come up with a similar plan for everyone. “Each family is so different,” Urbanek said, “and so unique in how they view their wealth.”

The common theme for most clients, though, is to develop a plan that reduces the amount of taxes children will have to pay on their inheritance, which takes some planning. People with less than $2 million usually can pass on their assets through their wills, Terry said. For people with more than $2 million apiece, it usually involves additional planning, with options such as gifting or buying life insurance policies for children. Gifting is an especially popular way of passing on wealth, with the ability to give up to $12,000 to a child each year without being taxed.

No matter the plan, Terry said it usually takes an estate attorney to walk clients through the ownership and trust issues involved in passing on wealth.

One challenge of late comes from sweeping tax law changes instituted by the Economic Growth and Tax Relief Reconciliation Act of 2001. Under the new law, children can inherit up to $2 million at the time of a parent’s death without paying taxes. That amount will increase to $3.5 million in 2009 and then the limit will disappear entirely in 2010. If Congress does not reconsider the issue by 2010, though, the tax will return to its 2002 rate.

“It’s this weird situation where people don’t know what’s going to happen in 2010,” Terry said, “so I think some people are just waiting to see what’s the federal government eventually going to do with estate tax.” However, with the government needing to pay off debt from the Iraq war and spend more for health-care programs, such as Medicare, Terry predicts the government will continue to collect some kind of inheritance tax.

The increase in personal wealth, Terry said, has encouraged a growth in mutual funds, annuities and other products that make managing money easier and give a good rate of return on investments.

Urbanek said many people also are looking at charitable giving through a family foundation, which children can help manage, or a community fund, which can direct donations under an umbrella of charities, such as through the Greater Des Moines Community Foundation. “Most nonprofits in town are keenly aware of this and most of them in fact have full-time development directors that are well schooled in planning of this type,” he said.

Though the tools for wealth management haven’t changed dramatically, wealth managers say more information about wealth management is available and more people can access greater options.

“The options haven’t changed,” Sarcone said, “but we see more couples and individuals who can avail themselves of the options because of the wealth that’s been accumulated.”