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The Great Wealth Transfer: Navigating with Purpose

Signature Wealth Concepts, LLC |

Over the coming decades, the financial landscape in the United States will undergo a transformation of historic proportions.  Commonly referred to as The Great Wealth Transfer, this shift will see an estimated $84 trillion passed down from Baby Boomers to their heirs, primarily Generation X and Millennials, by the year 20451.

This unprecedented movement of capital presents both vast opportunities and significant challenges for individuals and families. Without careful preparation and guidance, much of this wealth risks being diminished through taxation, poor planning, or mismanagement.

Understanding the Scope

Baby Boomers, the generation born between 1946 and 1964, hold more than 50% of the nation’s wealth2.  As this generation ages, the assets they have accumulated—ranging from investment portfolios and retirement accounts to real estate, businesses, and collectibles—are beginning to transition to younger family members.

The recipients of this wealth, often from Gen X and Millennial cohorts, have come of age during periods of economic instability and may not be fully prepared to manage significant inheritances. This lack of readiness heightens the need for education and professional guidance.

Key Proactive Planning Considerations

To navigate the Great Wealth Transfer successfully, families must engage in proactive and comprehensive planning. Some critical elements include:

  • Estate Planning*: A current and well-structured estate plan is essential. This includes wills, trusts, powers of attorney, and beneficiary designations that align with long-term goals.
  • Tax Efficiency*: Strategic gifting, use of lifetime exemptions, and trust structures can help minimize estate and income tax burdens, preserving more wealth for the next generation.
  • Business Succession: For business owners, succession planning is a must. Whether passing a business to family members or selling it, a thoughtful plan ensures continuity and maximizes value.
  • Family Communication: Transparent conversations around financial goals, responsibilities, and legacy intentions can help reduce conflict and foster unity.

* Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services.  You should consult with your own tax and legal professionals before proceeding with any course of action. 

Addressing the Risk of Wealth Dissipation

Studies have shown that 70% of wealth is lost by the second generation, and 90% by the third3. These figures are often not the result of poor market performance, but rather a lack of education, preparation, and shared values among inheriting family members. Building financial literacy and involving heirs in the planning process can mitigate these risks.

Implications for Philanthropy and Legacy

Many families view the Great Wealth Transfer as a chance to solidify their legacy through charitable giving. Donor-advised funds, family foundations, and planned giving strategies can align family wealth with personal or shared values, while also providing tax advantages.

The Role of Professional Advisors

Given the complexities involved, experienced financial advisors, estate planning attorneys, and tax professionals play a critical role. By working together, these professionals help families craft cohesive, multigenerational strategies that address the legal, financial, and emotional aspects of wealth transfer.

In Summary

The Great Wealth Transfer is reshaping the financial future of millions of American families. With careful planning, open communication, and strategic guidance, this generational shift can be an opportunity to preserve and grow wealth, strengthen family bonds, and make a lasting impact for years to come.

 

1.Cerulli Associates, “U.S. Wealth Transfer Report 2022: The Great Wealth Transfer,” 2022.

2.Board of Governors of the Federal Reserve System, “Distribution of Household Wealth in the U.S. since 1989,” Q4 2023, https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/

3.The Williams Group, “Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values”, 2011.

This article was curated by Signature Wealth Concepts and is being provided for informational purposes only based on our general understanding of the subject matter. Past market performance is not indicative of future results.

Duly registered and duly licensed financial professionals with Signature Wealth Concepts offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC (Equitable Financial Advisors in MI & TN); offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor; and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC; Equitable Network Insurance Agency of Utah LLC; Equitable Network of Puerto Rico, Inc.). Equitable Advisors and Equitable Network are affiliates and do not provide tax or legal advice or services. You should contact your personal tax and or legal advisors regarding your specific situation before taking action. Signature Wealth Concepts is not owned or operated by Equitable Advisors or Equitable Network. PPG-7936297.1(05/25)(exp.05/29)