Five steps for managing inherited wealth with care—honoring the legacy behind it while planning your own future.
Key insights:
An extraordinary amount of family wealth is moving from older Americans to the next generation (a phenomenon known as “the Great Wealth Transfer”), with Cerulli Associates projecting that $124 trillion will transfer to heirs and charities by 2048. More than half is expected to come from high-net-worth and ultra-high-net-worth Americans.
An inheritance can create new opportunities and significant responsibilities. In 2024, RBC Wealth Management surveyed 1,500 Americans with at least $1 million in investable assets and found that Generation X and millennial “Receivers” (those in line for a future inheritance) expect to inherit more than $2 million, on average. Yet only 54 percent consider themselves well prepared to receive that wealth.
Their concerns reveal the complexity of the transition. Nearly half of those surveyed worry about managing inherited wealth responsibly, 42 percent cite its tax consequences and 41 percent are concerned about preserving the assets they receive. Another 34 percent identify the emotional difficulty of deciding what to do with an inheritance.
Even if you know your family has significant wealth, anticipating an inheritance and actually receiving one can be very different experiences.
“When you’re in it, it’s a lot more challenging,” says Bobby Lovgren, head of Wealth Planning at RBC Wealth Management–U.S. “You can plan for it, but when it actually occurs, it’s a whole different situation.”
These five steps can help you approach your inheritance deliberately.
A large inheritance can fundamentally change what is financially possible. That does not mean you need to decide immediately what your new life should look like. “The best move is often to do very little,” Lovgren says.
Give yourself time to understand the inheritance and how receiving it changes your financial circumstances before making any major lifestyle changes, expensive purchases or significant investment decisions.
Buying a second home, leaving a career or making other consequential commitments may eventually make sense. But having the financial capacity to make a decision is different from determining whether it advances your long-term plans.
Sometimes, an inheritance may not be entirely in cash. It could include trusts, real estate, interests in family entities or operating businesses, concentrated securities positions or restricted private investments.
Lovgren recommends first understanding the inheritance on its own, before determining where it belongs in your existing wealth plan.
“To start, you have to divide it into two different components,” he says. “One is the inheritance itself, because there are a number of things that need to happen legally with an inheritance,” he explains. “Second, ask yourself, ‘How does this inheritance get incorporated into what I’ve already created and accomplished?'”
Creating that inventory can help clarify what you own, what you control, what obligations accompany those assets and which decisions require immediate attention.
Complex inherited wealth can raise financial, legal, estate, and tax questions simultaneously. “Depending on what you inherit, your financial advisor may need to work with your estate attorney, CPA or tax professional and specialists familiar with the particular assets that are becoming part of your portfolio,” Lovgren says.
RBC Wealth Management’s Wealth Transfer survey reflects how central the financial advisor’s role is. When asked where they’d turn to learn more about their inheritance, respondents ranked financial advisors first across all generations—and 94 percent of Receivers want professional support with family-inheritance discussions.
Before restructuring, selling or transferring inherited assets, be sure you understand the legal and tax consequences that may accompany those decisions. Such issues can become especially complicated when an inheritance contains trusts, businesses, real estate or privately held investments, rather than cash. Your circumstances, the structure of the inherited assets and potentially their location can all affect the questions you and your advisors need to address.
“It really varies by situation,” Lovgren says. “Your financial advisor can help identify matters that require specialized attention, while tax and legal professionals and other specialists can advise you about the implications of specific decisions.”
Inherited wealth may also carry family history, expectations and values that extend well beyond the assets themselves.
Nearly every Receiver RBC surveyed—99 percent—intends to respect the wishes of those who are passing down wealth, including how the inheritance is handled.
But honoring the Givers’ wishes doesn’t necessarily mean preserving every choice the previous generation made. Lovgren describes legacy in terms of “time, talent and treasure.” Families may continue philanthropic commitments, gather around traditions or causes important to the Giver, maintain a family mission statement or find new ways to honor what the family’s wealth represents. He also sees families hold charitable events or continue shared experiences that mattered to a parent or grandparent.
“It’s one thing to pass on wealth, but it’s more important to pass on values,” Lovgren says.
Understanding the purpose behind your family’s wealth can help you determine what traditions should continue and where your own path begins.
Receiving wealth can also become an inflection point in your own estate and legacy planning.
RBC Wealth Management’s research suggests inheritors already recognize that connection. Eighty-nine percent of Gen X respondents and 82 percent of millennials say receiving an inheritance would lead them to consider the legacy they eventually want to create for themselves.
Once you understand how inherited wealth fits with the assets you’ve accumulated independently, consider revisiting your estate plan, beneficiary designations and longer-term objectives with your advisors.
Lovgren also sees younger generations preparing for this transition before the money arrives. Some Gen X and millennial children may know their parents have significant wealth, without knowing precisely what or how much they will eventually inherit.
Even so, they are increasingly trying to understand how a future inheritance could affect their own plans and learn independently how to manage that wealth.
Receiving an inheritance closes one chapter of a family’s wealth plan, but it can open another. Managing that transition thoughtfully means moving from receiving the assets to understanding them, integrating them into your own financial life and deciding what you ultimately want that wealth to accomplish.
Learn more about RBC Wealth Management’s wealth transfer research.
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