“The Great Wealth Transfer” or “The Silver Tsunami”
Whether it’s called “The Great Wealth Transfer,” “The Silver Tsunami,” or some other catchy
sounding name, it’s a fact that a tremendous amount of wealth will pass from Baby Boomers to
younger generations in the next few decades. In fact, it’s said to be the largest transfer of
intergenerational wealth in history. Studies suggest it’s somewhere between $30 and $90 trillion.
Yes, that’s “trillion” with a “t.” What we are concerned with is the fact that evidence suggests
that many people, especially younger generations, are woefully unprepared to handle such an
inheritance. In fact, an Ohio State University study found that one third of people who received
an inheritance had a negative savings within two years of getting the money. Another study by
The Williams Group found that intergenerational wealth transfers often become a source of
tension and conflict among family members, and 70% of such transfers fail by the time they
reach the second generation. Regardless of whether you’ll be the one passing on wealth or
inheriting it, you must have a well-prepared estate plan in place to prevent the potentially
disastrous losses and other negative outcomes such transfers can lead to. What can you do to
prepare?
Here is what we suggest:
Create your own estate plan
It doesn’t matter how young you are, how much wealth you have, or if you have any children
yet—all adults over age 18 should have some basic estate planning vehicles in place. From there,
be sure to regularly update your plan on an annual basis and immediately after major life events
like marriage, births, deaths, inheritances, and divorce. Unlike traditional estate planning
professionals, when you work with us, we maintain a relationship with you long after your initial
estate planning documents are signed. Our Life & Legacy Planning Process features proprietary
systems designed to ensure your estate plan is regularly reviewed and updated over your lifetime,
so you don’t need to worry about overlooking anything, as your family, the law, and your assets
change over time.
Talk about wealth with your family early and often
Don't delay discussing your wealth with your family until retirement or old age. Start
communicating with your heirs – children, grandchildren, and others – about your wealth and
how you want them to use their inheritance as early as possible. Make these discussions a regular
occurrence to address various aspects of wealth as younger generations grow. The holiday season
is an ideal time for this conversation. If you're uncomfortable, reach out to us for assistance, as
we have specialized processes to facilitate these discussions more comfortably. When talking to
your loved ones, share your core values and lead by example in your family life, demonstrating
the importance of concepts like saving, charitable giving, and community service to ensure they
carry these values forward.
Discuss your wealth’s purpose
You worked hard to build your family wealth, so you’ve more than earned the right to stipulate
how it gets used and managed when you’re gone. While you can add specific terms and
conditions for your wealth’s future use in estate planning vehicles like Trusts, don’t make your
loved ones wait until you’re dead to learn how you want their inheritance used. If you want your
wealth to be used to fund your children’s college education, provide the down payment on their
first home, or invest for their retirement, tell them so.
Next Steps:
To schedule your Family Wealth Planning Session, please call (714) 997-7870, or click here to
contact CKLH by email.
