The Ameriprise Money & Family study reveals that while most investors plan to pass on wealth, few are completely transparent about their intentions to do so.
More than two-thirds (67%) of investors say passing along generational wealth to their heirs is important to them. But while they may be feeling generous with their assets, they’re not as forthcoming about their intentions to give it away.
This finding is one of many from the Ameriprise Money & Family study, which polled more than 3,000 Americans between the ages of 30-70 with at least $100,000 in investable assets.
Here’s what the survey revealed about how wealth moves from one generation to the next.
Investors are taking action to create generational wealth
Nearly 8 in 10 investors have taken at least one step to build generational wealth, which the study defines as “assets passed by one generation of a family to another.”
Nearly half (45%) of respondents say they are on track to pass on generational wealth to family.
Here’s how respondents say they are working towards that goal:
Some have started “giving while living”
While most people plan to have their assets disbursed to loved ones after they die, some are giving away sizable portions of their estates while they’re still alive.
Close to 20% of investors report they have already given away what they consider to be a substantial amount of money to their heirs.
A majority are planning to pass on real estate – but haven’t informed heirs
The study found 68% of respondents plan to leave real estate – such as a home, vacation home, or land – that they own to their heirs. But more than half (56%) of them have not told their heirs about their intentions to do so – a trend that hints at the financial and emotional complexities of transferring real estate, particularly when multiple heirs are involved.
Real estate isn’t the only topic investors are avoiding
Despite their intentions to pass assets from one generation to the next, only 19% are completely transparent with their relatives about finances.
However, investors are comfortable sharing their financial values
Financial assets aren’t everything investors want to give to their heirs – results show imparting financial values is just as important to investors as passing on money. In fact, parents are actively discussing their financial values with children and stepchildren, according to the Money & Family study.
“Investors are clearly more comfortable talking about their values as it relates to money than they are about the specifics of their estates. Instead of thinking of it as an ‘either/or’, we encourage people to use their values as a starting point in the conversation. This will make it easier to have an ongoing dialog and determine their comfort level with sharing more information as they make decisions and solidify their estate plans.”
Tips to help seamlessly transfer your wealth and financial values
Giving while living
- Calculate how much you can afford to give based on your future needs. Talk to a financial advisor to make sure the amount you give doesn’t setback your financial goals.
- Be open with your plans. Make your intentions for the gift clear to those who will be recipients. Is it in place of an inheritance? Or can they count on additional money after you have passed?
- Understand the current estate lifetime exemption and gift tax exclusion rules. Consult a Certified Public Accountant to determine how you may be able to leverage these exemptions for tax advantages.
Passing on real estate
- Communicate your wishes in advance to ease potential family tension, especially if the property will be divided among multiple people.
- Have a detailed plan that outlines key information about the property such as maintenance costs, taxes, and potential improvements that may be needed.
- Understand the tax implications of gifting real estate during your lifetime.
Passing on financial values
- Take the time to explain the reasons behind your financial decisions to your family.
- Consider conversation starters that can help younger generations of your family understand what shapes your financial values. For example, talk about:
- Lessons learned
- Causes you care about
- How you’ve invested and grown your nest egg
Is generational wealth one of your financial goals?
Whether you are in the beginning stages of building generational wealth, starting to explore your estate planning options or need help communicating your plan to your heirs, we are here to help.
We can provide personalized investment recommendations to help you meet your goals, as well as work with your estate attorney and tax advisor to help ensure your wishes are carried out the way you intend. We can also help you talk with your loved ones about your estate plans.
After all, sharing your plans now can help improve communication, prevent future conflicts and ensure your family knows what's important to you.