The Great Wealth Transfer: Planning with Purpose Across Generations

Baby Boomers and earlier generations (born before 1964) currently hold over 60% of total assets in the United States.¹ Today, members of these generations face multiple financial decisions simultaneously: caring for elderly parents, managing their own healthcare expenses, and supporting younger family members or important causes, to name a few.

Meanwhile, Generation X (born after 1965) and younger generations encounter their own set of challenges. One of the most significant is the rising cost of homeownership relative to income. In the 1960s, it took about 4.4 years of income to purchase an average house; by 2024, this ratio has increased to 7.6 years.²

The Great Wealth Transfer

One of the most significant financial events on the horizon is the Great Wealth Transfer. It is anticipated that older generations will pass down approximately $84 trillion in assets to their heirs and charities by 2045.³ Gifting assets while alive can benefit both older and younger generations if done carefully. These decisions should be made collaboratively within families and with the guidance of financial professionals.

Financial Considerations When Gifting During Life

Both state and federal estate taxes can significantly reduce the value of an inheritance. The federal estate tax applies to estates worth more than $13.99 million in 2025.⁴ Additionally, 12 states and the District of Columbia impose their own estate taxes, with rates varying widely.⁵ By gifting assets while alive, it is possible to reduce the size of a taxable estate and potentially avoid taxes altogether. This approach requires careful financial planning to maximize the benefits for both the grantor and the recipients.

Non-Financial Considerations When Gifting During Life

Gifting assets before death allows grantors to see how their money is used and enjoyed. This can provide personal satisfaction and the opportunity to offer guidance on financial decisions. For younger generations facing challenges such as the high cost of homeownership, childcare, and college expenses, receiving financial support can be transformative. By witnessing the positive effects of their generosity, those who choose to gift can ensure their values and financial wisdom are passed down to the next generation, helping to alleviate some of these significant financial burdens.

Ensuring Personal Financial Stability

Before considering gifting during life, it is crucial that one’s own financial situation is solid. This includes having a comprehensive financial plan that covers long-term care, healthcare costs, and other personal expenses. By securing your own financial future, Boomers can confidently support their causes and younger family members without compromising their own well-being.

Planning Through Numbers and Emotions

When making decisions about wealth transfer, it is essential to consider both financial and emotional factors. Analyzing raw numbers, such as tax implications and financial benefits, provides a clear framework for optimizing wealth distribution. However, the emotional and relational aspects are equally important. Understanding the impact of these decisions on family dynamics, personal satisfaction, and the legacy one leaves behind can lead to more thoughtful and meaningful planning.

By integrating both perspectives, families can ensure that their financial decisions not only make sense on paper but also resonate with their values and aspirations. This holistic approach fosters stronger relationships and a more secure financial future for all generations involved.

If balancing the emotional and economic factors of wealth transfer into your financial plan seems daunting, lean on your financial advisor to help navigate life’s financial decisions.

Sources:

1 The Fed - Comparison: Compare Wealth Components across Groups
2 US House Prices Vs Wages - TimeTrex
3 The Great Wealth Transfer From Baby Boomers To Millennials Will Impact The Job Market And Economy
4 Estate tax | Internal Revenue Service
5 Estate and Inheritance Taxes by State, 2024

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