Preparing for the Future: Insights from our Community on Estate Planning

The world is poised for the largest generational wealth transfer in history, with a projected $124 trillion in assets to be transferred by 2048.¹ In our proprietary 2024 survey, we surveyed ultra-high net worth (UHNW) individuals in our network to better understand how they are preparing for this momentous wealth transfer and key areas of concern.²

While many benefactors feel well-prepared for the transfer, navigating conversations with their children about the nuances of transferring wealth remains a key concern. This is reinforced by key themes from our discussions with clients revealing their focus on managing the complexities of wealth preservation and legacy creation in a rapidly evolving world.

Conversations with children about wealth

As may be expected, almost all individuals with children (95%+) name them as beneficiaries in a portion of their estate plans. A key consideration for many benefactors in their wealth planning journey is deciding when to involve their children in discussions about wealth and the future. Discussing family wealth with children is a highly personal experience and many of the individuals surveyed choose to delay sharing the full extent of their wealth until later in the child’s life, or even into adulthood.

The majority of parents wait until their child is 18 years or older to discuss wealth. Of those surveyed, 14% do not discuss wealth at all with their children before passing it down.

Breakdown of when wealth conversations begin

The individuals surveyed shared some reasons why they wait to have wealth conversations. 

• Desire to retain flexibility with how to spend their wealth. They strive to balance making an impact during their lifetime and providing for their family’s future.
• Potential negative effects of acknowledging wealth too early. Some worry that understanding the full extent of family wealth could impede their children’s motivation to create their own successes.

Discussions about financial education, on the other hand, tend to happen earlier – with most talking to their children about budgeting and investing before the age of 18. While respondents were content with ongoing, tailored advice and guidance from professional wealth managers across estate planning, investing, and philanthropic giving—investment education for their children was the key area of additional support articulated.

For many, conversations with children around wealth tend to be more informal. Opportunities for these conversations can arise when:

• Making large financial decisions
• Discussing or participating in charitable activites
• Participating in family bonding activities like travel or holidays
• Responding to children proactively asking questions

If you are interested in exploring a more formal structure for your conversations, view our guide to family meetings which provides tips on roles and responsibilities, what to include on the agenda, and the logistics of the meeting.

Estate Planning Preparedness is High

In terms of broader estate planning, a majority of respondents (around 70%) say they feel prepared for wealth transition when the time comes.

Almost all respondents (over 90%) have formalized, or are in the process of formalizing, their transition plans, with the majority revisiting these estate plans every 1 to 5 years.

One factor to feeling prepared is having the right structure in place for their future selves, children, and legacy. The following documentation and accounts have been established by survey respondents and may be particularly relevant considerations for those seeking to implement more formalized wealth structures.

Power of Attorney

Planning for incapacity is as important as planning for your passing, as without a power of attorney your assets may be frozen for a period during illness or incapacity and a guardian or conservator may need to be appointed by a court.

Over half of those surveyed have this in place, ensuring assets and decisions are managed properly in case of incapacity.

Revocable and Irrevocable Trusts

Revocable trusts are used in estate planning to avoid probate and afford privacy while enabling the grantor to retain control over the assets and flexibility over trust terms. In contrast, a grantor generally cedes ownership and control of assets placed in an irrevocable trust to effectively remove assets from the taxable estate.

Around half surveyed have these set up. The fact that the numbers for irrevocable trusts are lower for survey respondents aged 55 or younger could suggest that use of these instruments is linked is linked to the stage of life they have reached and the confidence they feel in having amassed sufficient wealth to consider gifting or transferring into irrevocable trust vehicles.

HIPAA Release

A HIPAA release form grants permission for the disclosure of protected health information to specified third parties and may be important for medical treatment, payment, or other healthcare operations.

Less than 40% of the UHNW surveyed have this in place.

Prenuptial Agreements

A prenuptial agreement is a contractual agreement between two individuals, established prior to marriage or civil union, which specifies the division of assets upon the termination of the union, whether by divorce or by death.

Only ~10% of the UHNW individuals surveyed have these legal protections in place
Furthermore, of that amount, a higher proportion of those who inherited their wealth have a prenuptial agreement over those who created their wealth.

Legacy Gifting Trusts

Legacy gifting trusts are irrevocable trusts often set up to make gifts to children or grandchildren who are minors and assets may remain in trust long term. Over time, early and regular gifting can result in significant tax savings as the assets gifted and future appreciation on those assets can be removed from the taxable estate.

A notable number – but still under half of surveyed UHNW individuals – have these trusts in place for their children, demonstrating a strong commitment to future opportunities.

Uniform Transfer to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA)

These custodial investment accounts for minors offer tax advantages and flexibility without the need for a formal trust. Their primary drawback, and a key reason for their limited use among survey respondents, is the irrevocable nature of transfers into this account and that the minor gains full access to the funds upon reaching an age of majority (typically 18 – 25 years old).
 

To learn more about steps you can take when preparing and planning for the future, read our estate planning checklist.

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

² Methodology: the survey was anonymously distributed to ultra-high net worth clients, including 359 women and 156 men. Only those who reported a net worth over $10 million were included in the data.