Have you heard of the Great Wealth Transfer? If you’re a millennial, it will likely be of particular interest to you, as it may involve an inheritance coming your way. Do you know how you would handle a large influx of money? How millennials manage their wealth in the coming years will play a large role in achieving financial confidence.

What is the Great Wealth Transfer and will it impact you?

By 2030, a large amount of wealth is predicted to be passed down from boomers to millennials in what has been deemed, “The Great Transfer of Wealth”. Millennials are estimated to increase their assets five-fold, inheriting some $68 trillion from their predecessors.¹ Before you order the Lamborghini or book the trip to Bora Bora, you have to start with what might be an uncomfortable situation with the previous generation, also known as your parents.  Getting clarity on how they would like their assets handled such as charitable donations, funeral expenses and how they plan to distribute their wealth (children, grandchildren or the beloved family pet) can help you manage your expectations about how you will leverage any additionally wealth that will come your way to maximize your own financial goals.

The question now becomes: If you are to receive an inheritance or markedly increase your income, do you know how to manage and protect that higher level of wealth?

Why do you need to be prepared?

Whether you prepare or not, the Great Wealth Transfer is coming. With a bit of planning, you can make the most of it while ensuring the transition goes smoothly. It’s important to consider factors such as the tax implications you may face, guidelines you need to follow as the beneficiary, and how you may be able to maximize compounding interest over time.

Considering that the majority of Americans have minimal savings, and are unprotected from financial emergencies, a lump sum of money could easily be spent on the long over-due wants and needs. But, going this route, you could end up back in financial insecurity with a tax bill and wondering what went wrong (like many lottery winners).

On the other hand, if you are prepared and have a plan for what to do with money, you can create long-term wealth. This route can not only support your immediate family but can also be passed down to the next generation.

If you expect to inherit money how can you start planning?

How can you, as a millennial, best prepare for the transfer of wealth?

The best place to start is to talk as a family, ideally with a qualified financial professional included in the conversations. These conversations can be uncomfortable. The goal is to get everyone on the same page. A professional can review your situation and show you your options.

Working with a financial professional you’ll be able to create a customized strategy based on your assets, goals and timeframe that balances your current needs with your desires for the future. Furthermore, you can learn about the importance of protecting your assets as they grow through options like disability insurance and, if you are a small business owner, liability insurance.

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2023-151223 Exp. 02/25