Family discussions should start early to successfully pass down both wealth and values.
The United States is going through the largest generational wealth transfer in its history, as roughly $124 trillion is expected to be passed down to heirs and charities by 2048, according to Cerulli’s U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024 report.
Significant wealth will change hands, making it crucial for high-net-worth families to plan ahead. With proper preparation and guidance, an inheritance can set your children up for a lifetime of financial security. But with no strategy in place, that wealth can create tension, confusion and disagreements among family members.
“A successful wealth transfer is not just about money or elaborate planning structures,” says Liz Jacovino, a wealth strategist at RBC Wealth Management–U.S. “It’s really about beneficiaries understanding their purpose and role within their families.”
Talking to your loved ones about the inheritance they will one day receive can help see that your values are passed down to the next generation, along with your wealth.
An inheritance can provide financial security to your heirs, but only if they are ready to use the wealth wisely. If you’re worried about their ability to do so, you aren’t alone. Roughly three-fourths of baby boomers don’t believe their heirs are very prepared for their inheritance, according to a 2024 RBC Wealth Management survey of high-net-worth “Givers” (baby boomers) and “Receivers” (Gen X and millennials) of future inheritances.
Yet the majority of Givers (61 percent) admit they have not provided guidance or direction to their beneficiaries on how they intend for the wealth to be used. Communicating ahead of time could make a huge difference. Givers who speak with their heirs early on feel much more prepared to leave money and are more confident their loved ones will respect their wishes after they pass away.
These conversations should not just be about the dollars and cents of the family inheritance. “Families that successfully transfer wealth do an excellent job sharing the history of how the wealth was created and the core values that led to this achievement. Remember to share your stories,” Jacovino says.
Wealth transfer and inheritances can be uncomfortable subjects to bring up. It involves talking about personal finances and your eventual death, and you may be worried about upsetting your loved ones with how you plan to distribute assets. It’s no wonder 67 percent of Givers in the RBC Wealth Management survey admitted to putting off these conversations.
However, avoiding these discussions can set the stage for misunderstandings and conflict, especially if heirs are surprised about the results of the wealth transfer after you pass away. When people are grieving, that revelation could hit even harder. Talking about your plans in advance can prevent hurt feelings and arguments.
These conversations can also prepare your loved ones to manage their future windfall properly. Without a plan, even large fortunes often disappear quickly. “In our experience, when heirs aren’t prepared, the majority of inheritances don’t last past the second generation,” Jacovino says.
This underscores how vital it is to prepare your heirs for the responsibility ahead. “The goal isn’t just to pass wealth to one generation, but hopefully many generations in the future,” Jacovino says.
If you aren’t sure how to begin talking to your heirs about their inheritance, consider these approaches:
Some people hesitate to discuss inheritances because they feel like it means they must reveal their net worth to their children, Jacovino says. But that’s not where she recommends starting. Instead, focus on the family values and the traditions you’d like your loved ones to maintain after you’re gone, such as holding regular reunions at the family vacation home or supporting a charitable cause that has special meaning to your family.Define what is expected of family members. For example, a young adult might be expected to complete their education, while an older sibling might be responsible for maintaining family customs. “Setting roles and expectations creates ownership and stewardship of the wealth,” Jacovino explains.
A low-pressure way to start these discussions is by calling a meeting to formulate your family values. This allows everyone to define their role and express what they think matters most to the family. You can then turn these principles into a written family mission statement that can be passed on to future generations.
“It’s crucial for the whole family to be involved in this process,” Jacovino says. “If one person dictates everything, they aren’t getting the buy-in from the next generation.”
Another way to broach the inheritance talk is by teaching your loved ones about managing money. For young children, this could be helping them set a budget for saving, spending and/or donating their monthly allowance.
Older family members may benefit from learning more about the tools in your wealth transfer and estate plans, such as the differences between wills and trusts.
You can also bring your family members into your charitable efforts. For example, if you have a donor-advised fund, you could work with your kids to determine what charities receive future grants. This offers another teachable moment—not just about managing money but also about passing down your philanthropic values.
If you are in a position to transfer some wealth before you pass away, lifetime gifting allows you to witness how your heirs manage the funds while you’re still around to advise them. It also gives you the chance to see the impact of the wealth you built—often when your kids need it most. In the survey, 96 percent of Receivers said an inheritance would be more impactful now than in 20 or 30 years.
A financial advisor can do more than create the technical documents behind your wealth transfer and estate plans. They can also help facilitate these conversations with your loved ones, such as by leading your family meeting as an objective third party, or creating an outline of topics for you to discuss.
Your advisor can also help teach your kids about financial management. In the survey, financial advisors were by far the primary resource both Givers and Receivers said they would consult to learn more about inheritances. Introducing your heirs to your advisor lets them know who they can turn to when the time comes.
An inheritance is much more than money—it’s also a chance to pass down your family traditions, values and principles. Ultimately, this should not be a single conversation where you share everything at once but a series of discussions that gradually bring in your loved ones.
Your financial advisor can help develop your family’s wealth transfer plan, as well as help you prepare for these upcoming discussions. By starting the conversation early, you can help secure your family’s financial future and see that your legacy lives on.
RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.
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