Over the next several decades, baby boomers — the wealthiest and one-time largest, generation in U.S. history — will pass down an estimated $30 trillion in assets to their children and grandchildren.
Many aging boomers, for instance, have critical decisions to make when it comes to estate planning. Yet if they hope to pass on any wealth at all, buying long-term care insurance might make some sense, said Erik Carter of Financial Finesse, a firm that provides workplace financial education programs.
The steep and rising cost of long-term care can easily wipe out an estate in a relatively short time, said Carter, a certified financial planner and lawyer with a background in estate planning.
Still, relatively few Americans have long-term care insurance, partly because the premiums can be hefty, especially for those with poor health histories. Many people simply underestimate the cost of long-term care or would rather not think about maybe needing it someday.
Medicare typically provides limited long-term care coverage, and to qualify for Medicaid, it may be necessary to spend down your assets, said Carter. In some states, adult children may be on the hook for their parents' long-term care bills.
Nationally, the median monthly cost for an in-home health aid (for 44 hours a week) is $3,861, according to a study by insurer Genworth Financial. For a private room in a nursing home, the median monthly cost is $7,698.
"The first thing to consider is whether there will be an estate at all, because of the cost of long-term care," Carter said. "You can wipe out an entire estate in just a few years of long-term care."
Long-term care insurance is only one piece of the puzzle. Later in life, there are often critical decisions to make with regard to estate planning.
"It's important for parents to set up their estate and do some legacy planning, which can mean a lot of different things, such as deciding whether to leave money to charity or heirs or to spend it all," said Douglas Boneparth, a CFP and partner at Longwave Financial, a fee-only firm.
For those who want to pass on wealth to the next generation, trusts can be a useful tool for doing so, experts say. A trust, which can be structured in different ways, might specify exactly when assets pass to your beneficiaries (such as when they reach a certain age) and how the money should be used, such as only for expenses tied to education, health care or other necessities. Trusts can also keep your estate out of probate court — which can be an expensive and time-consuming process — and minimize estate taxes.
Most estates aren't subject to federal estate tax, since the current exemption for individuals is $5.45 million, and $10.9 million for married couples. But many states have much lower estate-tax thresholds, Carter noted.
Expenses tied to the probate-court process can also chip away at your estate, leaving less for heirs, he noted. That's one reason to consider establishing a living trust, in which assets are held for your benefit during your lifetime and transferred to your designated beneficiaries after you die.
"If you have a will, your estate will go through probate court," Carter said. "It can cost thousands of dollars in legal and administrative fees, depending on the complexity of the estate and other issues.
"When you pass, the main benefit of a living trust is that it avoids probate," he added. "Assets held in the trust go immediately to the beneficiaries. It's easier, and it's private. The probate process is public, so everyone knows your business."
Gen Xers, born between 1965 and 1980, may be more inclined to do that than millennials, who, according to the Pew Research Center, have surpassed boomers as the nation's largest living generation. Millennials, born between 1981 and 1997, now number about 75 million, according to Pew.
"The stereotype of Gen Xers is that they tend to be more independent and less trusting of financial advisors," said Carter. "They are the latch-key kids and probably more reluctant to go along with their parents' advisors. Millennials had the helicopter parents," he added. "They are more likely to stick with their parents' advisors."
Perhaps. According to a survey by Investment News, 66 percent of children fire their parents' financial advisor after they inherit their parents' wealth.
Boneparth, who specializes in serving millennials, says the financial advice industry is aging, and many young adults simply can't relate to their parents' advisors.
According to research firm Cerulli Associates, the average age of advisors in the United States is 50, and about 40 percent of them are more than 55 years old.
Many older advisors hail from the brokerage world, and their approach may not sit well with younger Americans. Millennials, said Boneparth, want a holistic approach to financial planning, not simply investment recommendations, which they can easily get through low-cost online platforms.
"In my experience, millennials most certainly don't want to use their parents' financial advisor, due to issues of relatability," said Boneparth, a millennial himself. "Every child wants to rebel a bit."
Many advisory firms aren't oblivious to this. Some firms have responded by hiring young advisors or adding robo-advisor platforms with lower account minimums for clients just getting starting in their careers.
Some advisors have tried to build relationships with the adult children of clients by having them participate in family meetings and helping them work through their own financial issues, such as managing student loan debt.
Getting parents and their adult children to the same table can be challenging, though. Advisors say some clients aren't resistant to the idea of sharing their financial secrets with their adult children. What's more, many families are spread across long distances.
Jason Archambault, a CFP and founder of SK Wealth Management, says his firm has dealt with the distance issue by holding virtual meetings via web-conferencing platforms. Whether in person or online, such meetings, he said, serve multiple purposes.
"We have always tried to establish relationships with the beneficiaries of our older clients in order to help them plan, but also as a service to their parents so that they feel their estate plans are being understood and carried out," said Archambault.
— By Anna Robaton, special to CNBC.com