Independent Thinking^®

The Great Wealth Transfer: Best Practices for a Lasting Legacy

Over $100 trillion in assets will be transferred within 25 years in the United States.¹ At 77 years old, I have to consider that my legacy will be included in the total (although more on that later). In any case, it should be the largest intergenerational transfer of assets on record. Will it be successful? Will it support happy, successful families that contribute to our society?

I sure hope so. And I know that our clients do too. In my 50-plus years in the wealth management business, I’ve seen a lot, enough to develop some ideas on best practices for successful wealth transfer. Here are a few, in chronological order: (A note to my peers: If you’ve missed a few steps with your own children, there’s still time to try to apply what you’ve learned, as appropriate, to grandchildren.)

Start early

Many families wait until it’s too late to discuss finances; very few start too early. Spouses need to develop shared goals for raising successful children, financially and otherwise, before the tooth fairy’s first dollar is spent, and to keep communicating as the family evolves. This becomes more challenging in the event of divorce or within blended families, but it’s still doable. Advisors can help.

Educating young children about money and helping them develop a healthy perspective on their privilege is a gift, one that can be more valuable than the assets themselves. Paid work in addition to chores, modest allowances, small contributions to charities that interest them; these can all serve as teaching aids. So too can a robust “no,” even when finances allow otherwise. The ability to distinguish between needs and wants is invaluable.

As children grow, they will ask uncomfortable questions. And for affluent families, one of the questions is likely to be: “Are we rich?” They are already getting a sense of their circumstances, measuring their experiences and resources against those of their peers. They need context for that, something that could be provided by describing wealth as a tool for security and opportunity, not just luxury.

Consider differences

Every parent with more than one child, every grandparent with multiple grandchildren (and every sibling, for that matter), knows how different individuals within the same family can be. Sometimes it seems that the closer in age they are, the more unlike each other the children become. It makes sense to tailor decisions about education, work and other activities to each child’s unique circumstances. For example, part-time work can help build character, but for an athlete, theater kid, or someone with special needs, there may be other priorities.

There will be differences within communities too. But there’s arguably no better way to immunize a child to what has been described as “affluenza” than reminding them they don’t have to follow the crowd. That was hard enough when my own children were young; it’s going to be more difficult – and more important – as this wave of wealth flows in within an environment of social media.

Invest in the next generation

As children grow, particularly during adolescence, it’s a good idea to gradually increase transparency around family wealth. Most of our clients aim to provide children with a debt-free college education. This is a wonderful opportunity for grandparents to help, especially as direct payment of tuition is free of any gift tax.

Other tax effective ways to share wealth include taking advantage of the annual gift tax exclusion (currently $19,000 per person in 2025) by making direct gifts to older children and gifts in trust for younger children and grandchildren. Families with significant wealth can use the lifetime estate and gift tax exemption (currently $13.99 million per person). Larger gifts are typically placed in trusts to provide structured management and tax benefits. (Read “Choosing a Charitable Vehicle” to see which charitable giving vehicle might be right for your family).

Adult children can benefit from carefully considered support as well. Graduate educations, investments in startups and deposits on first homes are the most obvious examples that many, but by no means all, high net worth families consider funding. It is a very personal choice and one that should be made in close consultation with advisors who know the family dynamics.

Finally, for people my age, it makes sense to share transfer plans with middle-aged children, to aid in their own long-term planning.

Keep both eyes open

Change is inevitable. While we are already seeing evidence of this great wealth transfer, we are mindful that life expectancy is rising and that the additional years can be among the most expensive – which brings me back to my own expectations. With parents who lived into their late 90s and each generation living longer than the last, my wife and I need to consider our own future as well as that of our children and grandchildren.

No one should transfer more than they are comfortable giving or give more than (or before) their heirs will benefit from receiving. Again, trusts can play a critical role in successful wealth transfer, as can choosing the right personal and corporate trustee. Families have other options as well. It is interesting to note that in addition to the massive intergenerational wealth transfer, another $18 trillion is expected to go to charities over the next quarter-century.² Proper planning, education and communication are essential in making (and revisiting) related decisions.

Jeff Maurer is the Chairman of Evercore Wealth Management and Evercore Trust Company. He can be contacted at [email protected].

¹ The Cerulli Report—U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024.
² The Cerulli Report—U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2024.