Alvina Lo, the Chief Wealth Strategist at Wilmington Trust, emphasizes the importance of building generational wealth, especially for historically underrepresented communities. Wealth parity in the United States is difficult to achieve without passing wealth from one generation to the next, regardless of ethnicity or background. Lo, as a first-generation Asian American, has firsthand experience in wealth creation and understands the significance of financial literacy in trusts, tax planning, and asset protection.
Most successful individuals across the wealth continuum started with a small financial stake that provided initial security and allowed them to take risks. Lo highlights the importance of having a financial safety net and access to resources to grow, protect, and pass on wealth. For many Americans, their home represents a significant asset that can be passed on to the next generation. Lo discusses the option of holding on to a home instead of selling it to minimize capital gains tax upon inheritance.
Parents may consider bequeathing their home to their children upon their death to take advantage of the step-up in basis, which minimizes capital gains taxes for the heirs. It may be more tax-efficient to hold onto the property rather than selling it during retirement. Additionally, transferring properties to children while parents are alive can have tax implications that may be avoided by waiting until after the parent’s death. Viewing assets from a multigenerational perspective and understanding tax planning tools are critical for preserving and passing on wealth.
Building wealth that can close the wealth gap requires a strong foundation that each generation can build upon without starting from scratch. Viewing assets from a multigenerational perspective and utilizing smart tax planning tools are essential for preserving and passing on wealth to future generations. Strategic and well-informed wealth planning is necessary to establish a lasting and beneficial legacy. This article is for general information only, and professional advice should be sought for individual circumstances. Wilmington Trust does not provide tax, legal, or accounting advice.
Overall, Lo’s insights highlight the importance of understanding the complexities of wealth creation and passing on assets to secure a better financial future for future generations. By focusing on financial literacy, tax planning, and asset protection, individuals can work towards building generational wealth that can help bridge the wealth gap and create a lasting legacy for their families. Strategic and informed wealth planning is essential for long-term financial success.
