A recent study revealed a growing trend among American citizens who steer clear from discussing wealth transfer or inheritance within their families. Interestingly, about half of these people do have plans for their legacy. This reluctance can stir confusion and misunderstandings amongst family members when the person passes away.
Taboos around discussing wealth and inheritance often stems from a fear of death and an inherent discomfort around the topic. Despite this, financial professionals assert the importance of such dialogues for smoother transitions and avoiding potential disputes. By encouraging these tough conversations, families can nurture opened communication linings about financial issues and ready everyone for upcoming changes.
This hesitation is closely linked to an ongoing ‘great wealth transfer’. Over the next couple of decades, an estimated $84.4 trillion dollars will be passed to younger generations — mainly Gen z and millennials. These young recipients, who have varied investing behaviors compared to their predecessors, are set to inherit a massive wealth.
Having lived through financial crises, like the 2008 recession, these younger generations have unique perspectives towards investments. They are more inclined towards socially responsible investing, with a focus on making positive societal impacts through their wealth.
Advancements in financial technology make the investing proces more accessible to the digital-savvy generation.
Addressing hesitations in discussing wealth transfer
However, despite having the financial tools, managing such huge wealth can be daunting for the inexperienced. Therefore, the demand for financial advice and guidance is on the rise.
The ‘great wealth transfer’ opens up opportunities and challenges that need efficient tackling to ensure financial stability and growth. Hence, experts suggest involving neutral third parties, like attorneys or financial advisors, to steer these conversations ensuring fairness and making everyone feel heard.
Lena Haas, a functionary at Edward Jones, advocates involving financial experts in these discussions. They offer professional advice, provide unbiased insights, and recommend practical strategies. Haas believes that this approach can prevent misunderstandings and significantly boost the chances of achieving shared financial goals.
For a successful wealth management discussion, the inclusion of asset owners and potential beneficiaries is paramount. These discussions should be thorough, respectful, guided by clear agendas, and documented for future reference. Allowing adjustments for changing circumstances can make the process more flexible and accessible.
Lastly, seeking professional aid from financial advisors or estate planning attorneys can help overcome legal barriers and work out the best course of action. Inheritance planning is more than a financial procedure; it can also stand as a tool to pass down family values, ethical principles, and positive societal change. Therefore, a fruitful discussion should not only focus on the tangible transactions, but also encapsulate family legacies, ethical values, and potentials for philanthropy.
