A Boston-area wealth planning expert is championing a different concept in estate planning that focuses on improving generational wealth based on need and circumstances as opposed to an even distribution of wealth to the surviving heirs.Stephen Martiros, founder of Kindros, a non-profit website focusing on financial literacy for people of all ages, came up with the concept with his own family in mind.The results have been life changing for several of his family members.A GRAND NEW IDEAHis new idea: help distribute his moms estate while she was still living to help the next generation of family members not her children, but her grandchildren.Her grandchildren were together facing more than a quarter million dollars in student loans at interest rates as high as 13%.Now that total debt has been reduced to a total of $66,000 in seven years, and many of those family members have had their student loans paid off completely.I have worked with trust and estate and trust lawyers for many years, Martiros says.Generally, the principles for estate planning almost always are the same, which is to try to transfer wealth in a way thats that the wealth owner would want for the next generation, if its transferring within a family.Its almost always equal, he says.
Its sort of like everyones treated the same.But that doesnt bring forth the best solution, and certainly, doesnt necessarily help the people who probably could use the most help sooner.Peoples circumstances arent all the same.DONT WAITMartiros, 64, made the proposal to his mom, and she loved the idea.
The idea was to direct her estate, left to her largely by his father, in a way that would have the biggest impact on her eight grandchildren.She did not want to wait until after her death to help out family members, and she wanted money to go to those who needed it the most.The idea was basically, to skip a generation and focus on the heavy student loan burden of her grandchildren.Using a plan devised by Martiros, he put together a spreadsheet of all the student loan debt owed by his siblings children his nieces and nephews.(His own two children, 26-year-old twins, had graduated from college debt free.) That left eight nieces and nephews, one of their spouses, and his sister, who still had college debt from an advanced degree.Crunching the Numbers for FamilyMany of them had multiple loans; there were 28 different loans that needed to be paid off.
(That included the spouse of one grandchild, who had one of the largest student debt burdens.) The family decided that if they wanted to improve the lifestyle of all family members, that spouses debt had to be included.Martiros says his passion for helping others started with his late father, who was born in a small village in Albania that had no electricity or water and no commerce.That meant the villages had to help each other.He brought that mindset with him when he came to the United States in 1937 and brought his brother.
Helping family members was important.Thus, the idea was multi-faceted: to help the family members who needed it the most and figure out a way to get them the help immediately.That led to the discussion with his mother not to wait until her death to begin distributing her estate.Even though it meant basically skipping a generation, the entire whole-heartedly supported the plan.One of my principles in terms of what I do professionally is to think holistically, Martiros says.I think it really is trying to take time to understand each persons situation, their circumstances, the challenges they have, the conditions they face, and the conditions they faced in the past that might affect their current situation.Traditional estate planning doesnt bring forth the best solution, and certainly, doesnt necessarily help the people who probably could use the most help sooner, he says.
Also, it was a balancing act, he says.If you pay off just part of a loan, it doesnt reduce the payment.Lets say someone had a $20,000 student loan that was $300 a month, he says.No matter what the interest rate was, it will be $300 a month.
If I paid half of it off, she still has $300 a month, because thats set in the terms.So, we had to pay 100% of a loan off, and get it to zero, and then that payment would go away completely.Then we looked at whos got the most acute situation, which is really how much in payments, in total? are there monthly payments? That was the balancing act going down the list.It was a game changer for people.Some people got to feel student loan debt free, which is wonderful.
And then some people just got a huge lift.It was a great experience.THE OUTCOMEFor one niece getting rid of the student debt meant she could go back to school and get an advanced degree.Another said that her debt had been reduced enough so that she could afford to finish paying off the debt.
One had her debt reduced from $60,000 to $20,000.His mom recently passed away at age 85.But she felt like she accomplished what she set out to do.My mom didnt have the capacity to do more, Martiros says.She didnt have the financial resources to just pay everyone everything.
But she also felt like, she helped everyone substantially, and then, as shes been getting down to the limits of what she could do, she felt that some people could still afford a small amount of student debt.He says the family is not necessarily done.Well probably continue along that mindset of trying to help those who need more help.Because if you can create better conditions for people, they have better chance to be calmer and have more financial health.If you can create well-being and reduce stress and, in some ways, create more hope.
They just need a little boost, a little sense of direction, a sense that someone is rooting for them.Stay on top of your finances with Senior Planet from AARP.Join us for live lectures on finance, money management, budgeting tips, articles and more.Check out all our offerings here.
Questions? Call our Senior Planet Tech Hotline: 888-713-3495.Rodney A.Brooksis an award-winning journalist and author.The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S.
News & World Report and SeniorPlanet.com.He has also written for National Geographic, The Washington Post and USA TODAY and has testified before the U.S.Senate Special Committee on Aging.
His book, The Rise & Fall of the Freedmans Bank, And Its Lasting Socio-economic Impact on Black America was released in 2024.He is also author of the book Fixing the Racial Wealth Gap.His website iswww.rodneyabrooks.comYour use of any financial advice is at your sole discretion and risk.
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