Why Planning Now For The Great Wealth Transfer Is Crucial: Study Shows

Over the next three decades, over $70 trillion will pass from the Silent Generation and baby boomers to Gen Xers, millennials, and Gen Z. According to a recent study by ComparisonAdviser, this highlights the increasing need for financial advisors. The article examines how the Great Wealth Transfer will play out and who will benefit the most.

From its name, it's easy to assume that the Great Wealth Transfer will cause trillions of dollars to flow through to younger generations, solving financial problems and making people wealthy. However, the study points out that the event will likely only benefit children of parents who have money to give once they pass away.

More importantly, the article explains that without proper planning on the part of both wealthy parents and their heirs, individuals may fail to realize the full benefit of an inheritance. The study emphasizes that several challenges come into focus when there's no plan in place for one's wealth.

Family strife and drama can arise due to unclear communication of wishes or perception of unfair treatment. Additionally, wealth may diminish before one passes away due to healthcare costs, living expenses, or excessive spending. Another significant issue is subjecting one's estate to taxes because they didn't gift funds or place them in a trust beforehand.

"Based on the insights we received from financial experts, lack of planning before one's passing can cause financial conflict among families because a person's wishes may not be met or their retirement may diminish before they're able to pass it on," says Sean Canonica, Senior Finance Writer at ComparisonAdviser and the author of the study.

"In terms of the beneficiary, it's equally as important for them to seek assistance from a financial advisor to ensure they retain and, ideally, grow their windfall for years to come," continues Canonica. The study concludes that with proper planning and the assistance of a financial advisor, families can ensure that their wealth passes down to future generations without issue.

"With the help of a financial advisor, anyone with money to pass down can ensure they're on the right track. And with the Great Wealth Transfer getting underway and set to continue for the next couple of decades, it's never a bad time to prepare," says Canonica.

The findings underscore the importance of financial planning in ensuring that wealth is preserved and effectively transferred across generations. Proper communication and strategic financial decisions are essential in mitigating potential conflicts and financial losses.