Forget Waiting: How Millennials and Gen X Are Planning To Share Wealth Early
Written by
Cynthia Measom
Edited by
Jenna Klaverweiden
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Most Americans (97%) plan to gift, donate or pass on their money or assets, according to the Charles Schwab High Net Worth Investor Survey. However, some want to share their wealth early — before they die. In fact, a larger portion of wealthy millennials and wealthy Gen Xers said they want the next generation to enjoy their money while they are still alive.
Here’s how and why these generations are choosing to share wealth before passing away.
Also see what every generation needs to know about the great wealth transfer.
Millennials and Gen X Are Sharing Wealth Early
Between millennials and Gen Xers, millennials are much more likely to want to share wealth early. While 32% of millennials surveyed said they want to share their wealth with the next generation after they pass, 53% said they want the next generation to enjoy their money while they are still alive.
Gen X is pretty evenly split on the decision, with 45% wanting to wait until they pass to share their wealth and 44% wanting to share it while they are still alive.
Regarding how much of their wealth they’ll share during their lifetime, millennials are planning to share an average of 52%, while Gen Xers are planning to share 49%.
Why Are Millennials and Gen X Sharing Wealth Early?
Susan Hirshman, director of wealth management for Schwab Wealth Advisory and Schwab Center for Financial Research, said there are a few reasons wealthy millennials and Gen Xers are more than twice as likely to prefer sharing their wealth with the next generation during their lifetime compared with wealthy boomers.
“The need to provide assistance may be greater than in generations before due to rising housing and childcare costs,” she explained. “Furthermore, as life expectancies keep increasing and younger generations increasingly focus on experiences over material items, there is a strong desire to share joy and make memories.”
How Values and Legacy Figure In To Early Wealth Transfers
Hirshman explained that conversations about values and legacy can help family members create an emotional connection to the past, a clear and purposeful mission for today, and a sense of stewardship toward the future.
“To help foster open conversation, we suggest families examine their attitudes and beliefs about wealth, especially the ‘how’ and the ‘why’ behind these beliefs,” she explained. “The idea is to gain a fuller understanding of the meaning of money, priorities, and personal and family goals.”
According to Hirshman, families may want to consider and reflect on wealth, philanthropic, interpersonal and business values.
Hirshman said that differences of opinion between family members are likely, but it’s to be expected and one of the reasons to have these conversations. “Focus should be on where values overlap,” she added.
Make a Plan and Seek Help If Needed
As with all types of estate planning, having a plan in place is crucial.
“Plan, plan and plan,” Hirshman said. “Evaluate various scenarios and what ifs to ensure that first you are properly protected against the unexpected, such as an early death, disability, job loss, etc. Don’t forget to look up a generation. Understand if your parents are protected against any potential long-term care costs, and if not, what will your responsibility be, if any, for them.”
And if you find you want extra help, seeking out a financial advisor could be a good idea. According to Hirshman, financial advisors can support clients who want to transfer wealth early in multiple ways.
First, according to Hirshman, advisors can help clients understand different wealth transfer strategies — from straightforward options like annual exclusion gifting to more complex approaches like trusts. By outlining the benefits and drawbacks of each, she said, advisors ensure clients are informed when they meet with their estate planning attorneys.
Additionally, an advisor can assist in evaluating financial situations to determine the best course of action. “An advisor can help evaluate, based on a client’s lifestyle and future goals, if they will have a projected wealth surplus at plan end and can afford to give assets away today or in the near future or if they will need the funds to maintain their own lifestyle throughout their lives,” Hirshman explained.
And finally, an advisor can help execute these plans. “An advisor can help their clients through various exercises that will enable them to express their wealth values and purpose,” she said.
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