Study finds passing on wealth planned, but not discussed

While about 8 in 10 respondents to a recent study said they are taking steps to pass on wealth to their heirs, they are not discussing their plans with heirs – in some cases, in order to avoid any conflict such plans may evoke.

Nearly 8 in 10 respondents to The Money and Family Study by Ameriprise Financial Inc. have taken at least one step to build generational wealth, said Marcy Keckler, senior vice president, Financial Advice Strategy at Ameriprise Financial. “About two-thirds of people (67%) say passing it on to their heirs is important to them. But they’re not openly discussing their intentions to do so,” she added.

“About two-thirds of people (67%) say passing it on to their heirs is important to them. But they’re not openly discussing their intentions to do so."               Marcy Keckler, senior vice president, Financial Advice Strategy at Ameriprise Financial.

As an example, Keckler said, real estate is a common asset that people want to transfer. “Our study also found 68% of respondents plan to leave real estate, such as a primary home, vacation home, or land, that they own to their heirs,” she added. “However, over half (56%) of survey respondents have not spoken with their heirs about their plan to leave or give them real estate.”

When respondents were asked what keeps them from discussing their finances and estate planning with family members, the most common reason was cited was, “it’s none of their business” (33%), followed by, “I have shared some information, but don’t feel it’s necessary to be completely transparent” (32%), and “I don’t want to deal with any conflicts that might result” (18%).

Other survey findings

Related survey findings include:

• Nearly 8 in 10 investors have taken at least one step to build generational wealth, which the study defines as “assets passed by one generation of a family to another.”
• Nearly half (45%) of respondents say they are on track to pass on generational wealth to family.
• Close to 20% of investors report they have already given away what they consider to be a substantial amount of money to their heirs.
• Financial assets aren’t everything investors want to give to their heirs. Results show that imparting financial values is just as important to investors as passing on money. In fact, parents are actively discussing their financial values with children and stepchildren.
• More than two-thirds (67%) of investors say passing generational wealth to their heirs is important to them.

Helping clients solidify  estate plans

As financial advisors work with their clients to manage their wealth and solidify their estate plans, they can take several steps. Among the key steps suggested by Keckler:

• A financial advisor can facilitate important conversations that families may not be comfortable in initiating and help clients ease transfers of assets from one generation to the next.
• Advisors can help clients determine when to give – while living or after they pass. If the client would like to give while living, advisors can help clients evaluate if this option is appropriate for their financial situation. “Consider how the gift or inheritance will impact clients’ retirement plans and their future income needs,” Keckler said. “An advisor can also work with clients to determine the right amount of giving that doesn’t jeopardize the clients’ financial future.
• Advisors can work with clients to develop planning strategies to achieve clients’ goals of leaving money after they die and protecting it. For example, advisors can help clients understand how leveraging a life insurance policy can maximize the money for their heirs. A financial advisor can help review the life insurance options.
• Another important step is to help clients develop intergenerational gifting strategies. This step involves helping clients understand any tax implications of giving gifts, and options to give tax free.

The Money & Family Study was created by Ameriprise Financial Inc., and conducted online by Artemis Strategy Group earlier this year among 3,325 Americans ages 30–70 with $100,000 or more in investable assets. The full sample of 3,325 was weighted on age, gender and race/ethnicity.

 

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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