The Baby Boomer generation enjoyed a 40-year stock market run and rising housing prices to accumulate wealth for themselves. Baby Boomers held on to that wealth for most of their lives and continued to add to it. They did so much to the frustration of younger generations. However, the tides may be changing soon. Many in the Gen X and Millennial generations are beginning to enjoy the wealth transfer that is starting to take place between Baby Boomers and younger generations.
Cerulli Associates reports that Baby Boomers and the Silent Generation (the generation that came before the Boomers) are estimated to pass on approximately $84.4 trillion in assets through 2045. Of that number, $72.6 trillion is expected to go directly to their heirs. The Bank Administration Institute also reported on this and stated that it would make for the greatest wealth transfer in American history.
How the Numbers Break Down
Undoubtedly, Baby Boomers will hand down the vast majority of their wealth to their heirs. They are expected to hand down $53 trillion in wealth. That represents 63% of the wealth transferred to their heirs. Meanwhile, the Silent Generation is expected to hand down $15.8 trillion in wealth. Most of that wealth transfer will occur within the next ten years.
The ultra-wealthy are expected to represent a significant amount of the transferred wealth. The top 1.5% of households will transfer about $35.8 trillion in assets. This represents 42% of the total assets expected to be transferred in the coming years.
Those with assets have always sought to pass them down to their heirs. However, thanks to advancements in banking compliance and safety standards, such as identity verification technology, this process can now be accelerated to new levels of efficiency and security.
Research firm Hearts & Wallets spoke with 6,000 households about their expectations of receiving an inheritance from their older relatives. Of those surveyed, they found that 60% of households expect to receive some kind of inheritance. This included 54% of households with $100,000 or less in investable assets. Therefore, it is possible that many people will end up receiving life-changing money that could change their circumstances for a long time to come.
Assets Can’t Always be Left Directly in One’s Will
It is not always possible to simply leave one’s assets directly to their heirs in their will. Many people believe that they will simply leave everything behind in their will and that their heirs will be taken care of in that way. The problem with this type of thinking is that it doesn’t quite work out like that.
DGVE Law founder Danielle G. Van Ess spoke about this when speaking with gobankingrates.com and stated:
“Real estate and securities can fluctuate in value wildly, and it’s difficult to split those types of assets up amongst several beneficiaries without causing unintended personal relationship or tax consequences.”
You can trust his words of wisdom on this matter as he has more than 22 years of experience working in the world of private trusts and estates practice. He knows what he speaks. You certainly don’t want to create a major tax burden for your heirs. However, you might end up in a tough situation if you are not taking the appropriate steps right now to get things straightened out and keep your heirs out of any problematic situation.
Regardless of the specific types of assets you want to transfer to your heirs, you should set up a trust to help care for those assets. The trust can make the process of transferring the assets that you want to transfer to your heirs. It creates a step in between yourself and the assets you pass on. However, that is still easier than simply transferring everything in your will.
Transferring Inheritance through Banks
When it comes to managing inheritance and legacy, one important aspect is the smooth transfer of funds through bank accounts. This means finding efficient and secure ways to pass on wealth to the next generation. However, this process can be complex, with financial regulations and security concerns to consider. To help address these challenges, Jumio.com is a financial services firm that aims to provide valuable solutions for clients, businesses and entities to ensure a safe and reliable transfer process, stopping any financial crime that may happen to an account. With their help, families can confidently navigate a great transfer of wealth that provides utmost security for the next generations to come.
Overseas Protections Might be Necessary
Some ultra-wealthy families might need to seek extra protection via overseas investments. Wealthy families with worldwide assets might seek to use overseas bank accounts to protect those assets. In fact, some families will also seek to open overseas bank accounts to protect their domestic assets. Protecting some of those assets from extra tax liabilities might be easier when sheltered overseas. This is typically only a concern for families with very large estates, but it is good to know about it.