Nearly half of Americans in a recent survey said they expect to receive an inheritance worth more than $1 million. Financial advisors often have to start conversations about estate planning with their older clients. Many people are hesitant to discuss financial matters with their children or next of kin.
This lack of communication can lead to misunderstandings about inheritances. Affluent millennials and Gen-Xers are especially optimistic about their expected inheritances. In a survey by Equitable and WSJ Intelligence involving 500 wealthy retail investors, almost half anticipated inheriting over $1 million.
This expectation is part of the ‘Great Wealth Transfer.‘ Baby Boomers and older generations are set to pass down assets worth about $90 trillion to younger generations, according to a Northwestern Mutual survey. However, not everyone expecting a big inheritance may receive one. Earlier this year, Northwestern Mutual found that about a third of millennials believed they would receive an inheritance.
But only 22% of Baby Boomers planned to leave a financial gift behind. To avoid such misunderstandings, open family discussions about money are important. Recent studies suggest parents today are more willing to talk about family finances with their children than their own parents were.
Americans’ expectations and estate planning
But reluctance persists. “I encourage families to talk about this.
It is emotional and those conversations can be challenging, but there’s so much positive that can come out of it,” said H. Jude Boudreaux, a senior financial planner at The Planning Center. He suggests that conversations about inheritance should come from a place of care, not self-interest.
Despite the importance of these discussions, estate planning remains a “taboo topic” for many older individuals. They are often hesitant to discuss it even with their financial advisors, according to Byrke Sestok, a certified financial planner at Rightirement Wealth Partners. Younger generations also share some of this discomfort.
Mitchell Kraus, a financial advisor at Capital Intelligence Associates, notes that younger clients sometimes save more, believing they need to support their parents. His advice for starting these conversations: focus on the need for an estate plan rather than the specifics. In summary, while many Americans expect to receive significant inheritances, clear communication and proactive estate planning are essential.
They help avoid misunderstandings and ensure a smooth transfer of wealth.
