A recent poll reveals that almost 50% of Americans anticipate receiving an inheritance exceeding $1 million. Financial advisors frequently initiate discussions about estate planning with their older clientele. Many individuals feel uneasy addressing financial topics with their offspring or heirs.
This communication gap can result in misconceptions regarding inheritances. Wealthy millennials and Generation X individuals appear particularly hopeful about their expected windfalls. According to a survey conducted by Equitable and WSJ Intelligence of 500 affluent retail investors, nearly half expected to inherit over $1 million.
This belief is part of the ‘Great Wealth Transfer,’ where Baby Boomers and earlier generations are projected to transfer approximately $90 trillion in assets to younger generations, as stated in a Northwestern Mutual survey. Nonetheless, not everyone who anticipates a substantial inheritance is guaranteed to receive one. Earlier this year, Northwestern Mutual discovered that about one-third of millennials believed they would inherit money.
In contrast, only 22% of Baby Boomers intended to provide a financial legacy. To mitigate such misconceptions, it is crucial to engage in open dialogue about finances within families. Recent research indicates that contemporary parents are more inclined to discuss financial matters with their children than their predecessors.
Expectations of Americans and Estate Planning
However, apprehension remains. “I advocate for families to engage in these discussions.”
“These conversations can evoke strong emotions and may be difficult, yet they can yield significant positive outcomes,” stated H. Jude Boudreaux, a senior financial planner at The Planning Center. He advises that discussions about inheritance should stem from genuine care rather than self-serving motives.
Despite the necessity of these conversations, estate planning remains a “forbidden subject” for numerous older adults. They are often reluctant to address it even with their financial advisors, according to Byrke Sestok, a certified financial planner at Rightirement Wealth Partners. Younger generations tend to share some of this unease as well.
Mitchell Kraus, a financial advisor at Capital Intelligence Associates, points out that younger clients sometimes increase their savings, believing they have a responsibility to support their parents. His recommendation for kick-starting these discussions is to concentrate on the importance of having an estate plan rather than delving into the details. In conclusion, while a significant number of Americans foresee sizable inheritances, effective communication and proactive estate planning are vital.
These factors help prevent misunderstandings and facilitate a seamless transition of wealth.
