In this series, we’re helping you with your generational wealth management planning. In Part 1, we shared advice on creating family and professional wealth management teams. In Part 2, we discussed family finance meetings and creating a family wealth mission statement. In Part 3, we helped you build your estate plan and generational wealth management strategy. Here, in our final installment, we share advice to help you prepare for the actual intergenerational wealth transfer.
Whether you call it intergenerational wealth transfer, generational wealth transfer or family wealth transfer, these are simply names for passing wealth from the people who currently manage it down to their children and grandchildren. The goal for many families is to see that wealth maintained far into the future.
The Great Wealth Transfer is set to be the largest intergenerational wealth transfer in history. Over the next two decades, $68 trillion dollars is expected to move from Baby Boomers to their Gen X and Millennial children and grandchildren.1 Boomers now hold more than half of all wealth in the U.S. — compared to just 3% held by Millennials. It’s easy to see that this shift may create a major impact on Gen X and Millennial lives — and that a transfer of knowledge may also be required to help the inheriting generations manage their new-found wealth.
Your team of financial professionals can help with this education. For instance, one of our clients had us explain to heirs the mechanics of trusts — how they work, why they’re used, and what they can and can’t do. Working with your advisors also helps the family create relationships and build trust with the professionals, which can help smooth the actual transfer of wealth when the time comes.
Some families find it helpful to learn about each heir’s perspectives on wealth, as well as their financial priorities, risk tolerance and investment styles. Combined with skillsets, this may help you and your advisors determine specific family wealth transfer strategies, tools and tactics. For example, if an heir is not yet able to responsibly manage wealth, you might set up a trust to handle their inheritance.
Other families may connect inheritance to specific requirements, which might also weave in family values. For instance, part of the generational wealth transfer could be contingent on the heir being gainfully employed. Or college costs might be reimbursed if an heir achieves a certain grade point.
Passing on your wealth to future generations is a large responsibility. Taking time to prepare and plan can not only ease your own mind but may also reduce stress for your heirs when you pass away by providing valuable guidance during an emotional and difficult time.
Your Hancock Whitney team can help you with many aspects of your generational wealth transfer, including assisting with financial education for your heirs and discussing strategies for achieving your family financial goals and legacy vision. Contact us for a personal consultation.
1“3 Ways to Prepare Yourself for the Great Wealth Transfer,” Doone Rosin, Entrepreneur, posted Sept. 27, 2022, https://www.entrepreneur.com/money-finance/3-ways-to-prepare-yourself-for-the-great-wealth-transfer/434715,
“Strategies to Navigate the $68 Trillion ‘Great Wealth Transfer,’ According to Top-Ranked Advisors,” Jessica Dickler, CNBC, posted Oct. 17, 2022, https://www.cnbc.com/2022/10/17/how-to-navigate-the-great-wealth-transfer-according-to-top-advisors.html
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