We all have a romantic notion of the Lost Generation -- Hemingway, the Fitzgeralds, Paris in its glory days.
But the label might be equally apropos to describe some 45 million Americans born between 1964 and 1984, "Generation X." Their parents are the "baby boomers," supreme consumers who are living longer but, despite the 401(k) revolution, lack the savings to retire, can't count on pensions and Social Security to maintain their lifestyles -- and keep on working. The children of Generation X are "echo boomers," 71 million people born since 1983 in whom we place our greatest hopes for the future.
Generation X is too often neglected and too often neglectful. Its reputation is that of the disaffected.
Younger Gen-Xers earn about 80% of what their boomer parents earned twenty years ago. They have seen middle-management opportunities evaporate as companies "right-size" and higher paying manufacturing jobs displaced by lower-paying jobs in the service industries. More and more they compete with boomers who can't or won't retire and, unlike any generation before them, they simply can't see themselves doing as well as their parents.
A demoralized Generation X, some have observed, has simply backed away from any responsibility to manage family assets. Yet, social and economic trends notwithstanding, we have a few words of advice for Gen-Xers and their families.
For one thing, Generation X should be encouraged to do some estate planning. It's true that there are efforts afoot to repeal the Federal estate tax and, in fact, transfer taxes have been eliminated for many estates. But failing to plan, here as elsewhere, can wreak havoc on a family and its finances.
Nor should Gen-Xers and their parents become too comfortable about joint tenancy property, pensions, IRAs, life insurance, and other assets which aren't covered by wills and which will eventually escape probate. All kinds of assets need to be looked at globally and planned for globally.
Generation X may need some special help in the form of "sticks" (such as "spendthrift" trusts, which can protect family assets in the face of youthful and not-so-youthful indiscretions) and "carrots" (such as incentive trusts; take a look at the May 1999 "Lane Report", which profiles the strategy).
Gen-Xers aren't immune from the family dysfunctionality which plagues society at large; some argue that they are more susceptible to it than most. So, they should consider the possibility of multiple marriages and the toll they can take on a family's fortune. Prenuptial agreements, trusts dedicated to the needs of children from a previous marriage, and the careful and deliberate titling of assets might all help.
Gen-Xers and their parents should also consider special trusts for special needs (see the July 1999 "Lane Report," which deals with the opportunities they present) as well as "no-contest" clauses in wills to discourage legal actions by heirs who think their inheritances should have been more generous.
Oliver Wendell Holmes once observed that, "No generalization is worth a damn -- including this on." And our generalizations here about a directionless Generation X may be overbroad. That disclaimer to the side, it surely remains good advice for Gen-Xers and their families to recognize that paradigm shifts in our economy, and indeed in our society, demand greater, more careful and sooner attention to one's legal and financial planning.
Marc Lane is a business and tax attorney whose practice areas include: individual taxation; corporate tax planning; business tax planning; estate planning; investments; retirement planning; elder law; international trade; business law; and wills, trusts and estates. For more information, visit www.marcjlane.com.© 2004 Marc J. Lane
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