The Great Wealth Talk: 4 tips to help normalize the inheritance discussion

Elizabeth Anderson, CFP®, Senior Analyst, Client Needs Research

An estimated $84.4 trillion in assets will transfer from older generations to their heirs through 2045, in what’s referred to as the “Great Wealth Transfer.”¹ In anticipation, Edward Jones partnered with Next360 Partners and Morning Consult to understand Americans’ perceptions of generational wealth and their plans to inherit or transfer wealth — including not only money and other assets, but also values like health, family and purpose.   

Beyond traditional wealth transfer

• According to the findings, the transfer of wealth will look different for future generations, with 68% acknowledging that people living longer and spending more money than they used to will affect how much wealth is passed down.
• Americans are also thinking beyond the traditional transfer of wealth, which typically includes transferring assets to children at the parent’s passing. Some are planning to skip a generation and give to their grandchildren. Others plan to give during their lifetimes — perhaps allowing them to share in experiences with their loved ones or see their beneficiaries enjoy their inheritance.
• The study also revealed that those who plan to give an inheritance held a wide range of emotions about the topic.
  • While a third of respondents reported either feeling pride or feeling fulfilled at the prospect of passing assets to their beneficiaries, others reported anxiety and stress.
  • Many were concerned about their financial independence due to rising health care costs and how that might impact future inheritances. They also reported unease over how their heirs might handle their inheritance.

On the other side of the Great Wealth Transfer are the nearly one-third of Americans who anticipate receiving an inheritance — half of whom expect it will come within the next 10 years. While gratitude was the most common feeling they reported, they also indicated feelings of anxiety, stress and pressure related to the transfer.

Whether you plan to leave an inheritance or receive one — or possibly both — what should you do to address anxious feelings and smooth the way for your loved ones? Talk about it! Before the Great Wealth Transfer occurs, there should be the “Great Wealth Talk.”

Why have the Great Wealth Talk?

Engaging in generational wealth discussions remains critical to managing family harmony, decreasing uncertainty and addressing financial complexity. It can provide an opportunity to address the "why" behind your plan and a chance for you to share your wishes, dreams and values. How did you get to where you are? And how do you want your loved ones to continue that legacy?

Setting expectations

Setting expectations can go a long way when it comes to managing reactions. Discussing with your loved ones what your goals are and what they can expect — whether it’s the structure of their inheritance or your plans for who might be a decision-maker — a conversation can help avoid hard feelings or disharmony in the future. Finally, it’s an opportunity to address potential financial complexities that might exist.

Timing the conversation

While there’s no perfect time, we recommend starting these discussions now. It can be easy to put off potentially difficult and emotionally charged conversations, but delaying them doesn’t help anyone. And remember that the Great Wealth Talk isn’t a one-and-done concept, but rather a dynamic, ongoing dialogue.

As your circumstances change — like changes to your plan, your preferences, your health or your loved ones’ situation — it’s important to revisit your prior conversations and share new information. You might also decide to have discussions that represent a gradual spectrum, adding more detail over time.

Three approaches to the discussion

The Great Wealth Talk varies based on your individual situation, your goals and your comfort level. You should share what you’re comfortable with, and that might mean sharing different levels of detail with different parties. Consider three approaches:

• Basic: This is a high-level review of the estate-planning documents you have in place. You can focus on the roles and responsibilities of those you’ve appointed in your plan to serve as executor/personal representative, agents under powers of attorney for finances and health care, or successor trustee. Typically, you won’t discuss your precise finances, but instead, you can take the time to introduce your broader plans and your professional team.
• A closer look: This includes a high-level review of your documents as well as your financial situation. This type of discussion might include your net worth, what types of assets you own and perhaps even account balances. You might also take the opportunity to set your family’s minds at ease about what you have planned, what your wishes are and how you plan to address unexpected events in the future.
• The deep dive: This discussion provides total transparency. You’ll detail both your estate plan and financial situation as well as information about how you anticipate dividing your assets and what beneficiaries might expect. Such a conversation can be beneficial for both sides because it gives you a chance to hear what your beneficiaries might want — e.g., maybe no one wants to receive the time share or the family lake house — while they receive realistic expectations for the future. Although the discussion will likely be emotional, and perhaps even difficult, it also provides you with the forum to share your thought process and give context to your plans. Your beneficiaries won’t have to draw their own conclusions after it’s too late to hear from you.

There’s no right answer as to what type of conversation might be appropriate for you and your family. Try to figure out what level of detail you want to share, how comfortable you are with sharing it, and go from there. You can always start small and expand as you evaluate the effectiveness of your discussion and responses from participants.

How we can help

Some 57% of Americans believe that having a financial professional guide and inform their family discussions around wealth transfer and inheritance would make planning and reaching a family consensus easier, according to our findings. Your Edward Jones team can help organize a family meeting, act as a neutral third party and provide guidance. It also allows you to introduce your family to the professionals who are helping you meet your goals and carry out your legacy. And if you haven’t had one of these discussions, it’s a good time to begin working with your financial advisor.

As the Great Wealth Transfer marches forward, it’s more important than ever to connect as a family with the experienced guidance of a financial professional to help navigate the transition for you and your loved ones.