As we enter the era of the Great Wealth Transfer, we are witnessing a profound shift in the landscape of wealth. Over the next two decades, an estimated $84 trillion will be passed down from generation to generation, with $72 trillion going to heirs and $12 trillion to charitable causes, according to Cerulli data. For ultra-wealthy families, ensuring wealth is transferred effectively and with purpose requires much more than sound financial planning. It requires a comprehensive, multi-faceted approach that considers the financial, legal and emotional complexities inherent in such a significant transition. As trusted advisors, we guide families through this delicate process, ensuring that every family member is prepared, engaged and aligned with the family’s vision for the future. The following three strategies are critical in creating a successful and sustainable wealth transfer plan.
- Foster Early, Open Dialogue Across Generations
One of the most crucial elements of intergenerational wealth planning is open communication. However, for many wealthy families, discussing financial matters can be challenging. It’s not uncommon for parents to avoid conversations about money, inheritance, and the distribution of wealth—often for fear of creating tension or discomfort. Yet, engaging the entire family early in the process is vital for long-term success.
As advisors, we can play a pivotal role in facilitating these conversations. It’s essential to bring all generations to the table—particularly the next generation—to ensure they understand the family’s values, the goals behind wealth accumulation and their future role of managing and stewarding the wealth. By including younger family members in the discussion, we help instill a sense of responsibility, leadership and agency.
Moreover, we should consider involving younger financial professionals in these discussions. Their involvement can create a more relatable experience for younger heirs, allowing them to feel more comfortable and supported. Additionally, private, one-on-one meetings across generations can help build trust and ensure each family member’s voice is heard.
- Prepare for the Long Term—Beyond Immediate Financial Needs
While it’s essential to address short-term financial concerns, the true work of wealth transfer lies in preparing the next generation to manage the family’s legacy for years to come. This requires forward-thinking tax and estate planning, which must be integrated into a broader wealth preservation strategy. Effective wealth transfer is not just about passing down assets; it’s about preserving and growing wealth. Advisors must help families anticipate the tax implications of their decisions, including the potential impact of shifting tax laws. For instance, the Tax Cuts and Jobs Act of 2017, set to expire in 2025, may create new opportunities or challenges that must be addressed today. Advisors must stay vigilant and proactive in adjusting strategies to account for evolving tax policies and their implications. Failure to plan ahead can lead to unnecessary costs—such as higher estate taxes and probate fees—and even foster conflict among heirs. A well-executed tax plan can significantly reduce these risks. As advisors, we are responsible for demystifying these complex financial topics and providing clear, actionable strategies that align with the family’s long-term goals.
- Empower the Next Generation Through Education and Engagement
Wealthy families have the unique opportunity to transfer financial assets and the knowledge and values that have underpinned their success. Ensuring that the next generation is equipped to guide the wealth entrusted to them is a critical component of any wealth transfer plan. This requires a focus on education and engagement. Families must not only prepare heirs to manage financial assets but also instill a deeper understanding of their responsibility to uphold the family legacy. Advisors play an important role in guiding this educational process, ensuring that the next generation understands both the practical and philosophical aspects of wealth management.
In building a comprehensive wealth transfer plan, engaging the full spectrum of advisors—legal professionals, accountants, tax planners, insurance experts, and others is essential. This holistic approach allows for seamless coordination, ensuring that all transfer elements align with the family’s vision. Ultimately, the goal is to create a plan that provides clarity, transparency and a roadmap for how wealth will be distributed and managed across generations.
The Bottom Line
A successful wealth transfer plan is built on preparation, clear communication and thoughtful engagement. It begins with a deep understanding of the family’s values, goals and priorities and extends to creating a detailed, actionable plan that prepares every family member for the next steps. As advisors, we have the privilege and responsibility to guide our clients through this process—helping them achieve a seamless and productive transfer of wealth that will stand the test of time.
By fostering open dialogue, planning for the long term and empowering the next generation, families can ensure that their wealth is preserved and continues to thrive.
Brian Brandt is Managing Director at FFT Wealth Management LLC