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What is the Great Wealth Transfer?

By 2045, between $84-$73 trillion will be handed down from the generation of Baby Boomers, those born between 1946 to 1964, to their declared heirs of children or grandchildren.

This upcoming transfer of wealth is being referred to as The Great Wealth Transfer because it is the largest wealth transfer to take place in human history.

For many reasons, the Boomer generation feels uneasy about handing down money and assets to their children or grandchildren.

How Generational Gaps are Affecting The Great Wealth Transfer

According to studies by Cerulli Associates, Generation X (those born between 1965-1980) is expected to inherit the greatest portion of the wealth transfer: "including $8.9 trillion in the next 10 years, and totaling $29.6 trillion over the next 25 years."

Millennials (those born between 1980-1995) "are expected to inherit more than $27 trillion by 2045 and will surpass Generation X in annual receipts before 2040."

While the Boomer generation has had years to learn financial literacy and how to handle their money and assets, the receiving ages, Generation X and Millennials, lack the years of experience in managing the money they will eventually inherit.

Differences in cultural, social, and in this case, financial awareness in the generations have created a sense of uneasiness in the process of wealth transfer. Research conducted by global investment bank USB has determined that: "over two-thirds (70%) of high-net-worth investors are concerned about their heirs "using their inheritance wisely…"

The Boomer generation fears that the receiving generations have different opinions on what spending their inheritance "wisely" means.

Aside from generational differences, the research also concluded that Boomers are worried about transferring wealth in the "most tax-optimized way possible." As well as in the smoothest way, without any issues.

Combatting the Uneasiness of Wealth Transfer

The discussion of inheritance is difficult as it touches upon the death of loved ones; however, transparency throughout the process of wealth transfer is greatly encouraged to combat the uneasiness that may come along the process.

It is essential to discuss the opinions and boundaries of the current controllers as well as the future stakeholders. Open conversation and discussion have proven to reduce the stress of wealth transfer.

Transparency can give all family members the opportunity to explain what the family legacy means to them. By openly discussing all wishes and boundaries, it can create one centralized idea and ease the mind of all parties involved.

For example, a family legacy may include continuing to contribute to the same philanthropies their parents or grandparents were passionate about as well as beginning to contribute to new ones.

Your Family's Generational Wealth

The Great Wealth Transfer is one of an unprecedented size. It is necessary to build a plan for your generational wealth. Additionally, it is ideal to transfer wealth to your lineage in the most straightforward tax optimization process possible.

Park City Wealth Advisors specializes in family governance and wealth transfer and are ready to help bridge the gap in your family’s financial literacy.

With years of experience in wealth management, financial planning, and family office experience, we adapt your family's needs to construct a plan that preserves the wealth of your lineage.

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