'Giving while living' alters inheritances

Of that, $25 trillion would go to heirs, the rest to taxes and charities, the center said. The center's estimate was four times higher than earlier estimates.

The prospect of "the largest wealth transfer in history" set many debt-burdened baby boomers atwitter with hope that they'd eventually be bailed out by their more frugal parents.

But wealth analysts and groups such as AARP criticized the Boston College estimate as out of whack, saying it was too optimistic in light of rising health care costs and longer life spans.

The Wealth Center stands by the study and notes that the 55-year time frame includes the anticipated deaths of millions of baby boomers (by 2052) and their bequests to families.

Even so, the center's estimate that $6 trillion would be donated to charities in a "Golden Age of Philanthropy" might have to be revised downward, says John Havens of the Wealth Center.

Since the study was conducted in 1998, "charitable bequests are not coming in at the level we anticipated because more people are giving while they're alive, instead of dead," he says.

In 2006, AARP further discouraged many boomers from expecting big inheritances when it issued a study titled "In Their Dreams."

You can guess its conclusion: In 2004, AARP said, only 20% of all households inherited money, and the median amount was $50,000.

Face it, AARP said: The rich get richer. The largest chunk of bequests that exceed $100,000 — 24% of them — go to households with a net worth of more than $450,000.

"People who receive the largest inheritances are already quite well off," says John Rother, policy director for AARP.

"They don't need to be bailed out."

Passing it on before passing on

Most of the gifts that pass among family members aren't mega-transfers, but rather millions of small ones, says William Gale of the Brookings Institution.

Gale co-wrote a study on wealth transfer in 1993 that focused on "intentional" giving while living. He estimated that grandchildren receive $5 billion a year from living relatives, second to children, who get $33.7 billion.

Paying for education is one way that older generations are helping younger ones.

In a 2006 survey of 828 people who had grandchildren under age 21, 55% said they contribute in some way to their grandchildren's education, according to the MetLife Mature Market Institute, the research arm of the insurance and financial services firm.

"They see the family as needing help now, and they want to help them now," says Sandra Timmerman, director of the institute.

Grandparents are helping fund 529 plans or prepaid college plans that allow money to grow tax-free; the withdrawals are tax-free when used for school expenses.

The amount invested in 529 plans doubled in just the past three years to $104.9 billion, and it's expected to more than double again by 2011, the Financial Research Corp. says.

It's unclear just how much of that money is coming from grandparents. But wealth managers and financial planners say they're seeing more clients using the plans to transfer wealth.

Grandparents also are paying tuition outright.

"There's nothing to say you can't just drop $50,000 directly to Harvard," says estate attorney Green. (You can pay for medical and education expenses for anyone without filing gift-tax returns, as long as you pay the institution directly.)

Some young people today are enjoying the fruits of their parents' and grandparents' savings habits.

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