Trillions of dollars could change hands in what’s being dubbed the Great Wealth Transfer. According to CNBC, older generations are expected to leave anywhere from $36 trillion to more than $100 trillion to their heirs over the coming decades. However, some young adults may not receive the inheritances they’re expecting, and research from Northwestern Mutual shows that only 31% of U.S. adults expect to leave an inheritance or financial gift. With so much wealth on the line, proactive estate planning is the key to protecting assets and avoiding family conflict.
Deciding When – and Whether – to Transfer Wealth
You’ve worked hard to save money. Now that you’re retired, you’re faced with a choice.
- Do you save as much as possible and let your loved ones inherit? This is often viewed as the traditional approach. Since you don’t know how long you’ll live or what financial emergencies will affect you, you don’t know how much money you’ll need. It can therefore seem practical to maintain as much money as possible for as long as possible, ensuring that you have enough to cover your needs.
- Do you spend your savings on yourself? Your retirement is your chance to travel the world, indulge in fine dining and take up new hobbies, and all of that can be expensive. After a lifetime of saving, you may decide that enjoying more of your wealth during retirement is a priority.
- Do you give money to your family now? Let’s say you live to a nice old age of 95, and after your passing, your 70-year-old son inherits your estate. By this time, your son is already retired and hopefully has savings of his own, so the inheritance may have little financial impact. Some argue that it’s better to adopt a gifting strategy that gives loved ones financial help when they need it most, for example, when they’re buying their first homes or putting kids through college. A gifting strategy also allows you to see the impact of your gifts.
There May Not Be Much to Inherit
Even when someone plans to leave a sizable inheritance, there may not be much left.
Health care costs are much higher than many retirees anticipate. According to Fidelity Investments, a 65-year-old can expect to spend approximately $185,500 on health care and medical expenses in retirement.
Nonmedical long-term care can be even more expensive. CareScout says a home in an assisted living community costs an average of $6,200 a month as of 2025. Some facilities also have expensive entrance fees. According to the San Francisco Chronicle, one facility charged a fee of $333,000 on top of a $5,996 monthly fee.
The Inheritance Expectation Gap
Many young adults may be counting on an inheritance that will never materialize.
According to Northwestern Mutual, only 60% of Americans who plan to leave an inheritance have talked to their family about their plans, and around 40% of baby boomers do not have a will. Without estate planning and open communication, there may be some unpleasant surprises when younger family members realize they are getting little or nothing.
Turn Your Wishes into a Plan
Ultimately, you should get to decide what happens to your estate, whether this involves spending it on yourself, donating it to charity or leaving it to your loved ones. However, proper planning is important to ensure that your wishes are known and followed.
- Create an airtight estate plan. Proactive estate planning can help you take control of your assets. For example, you may want to establish a trust so you can direct how funds are used. You may also benefit from tax strategies to avoid paying unnecessary estate tax liability; this can be especially important in Oregon due to the state’s estate tax.
- Consider discussing your plans with your loved ones. Your family may be afraid to ask about your plans because they don’t want to appear greedy, but knowing what they can expect may help them as they make financial decisions. Open conversations can also help reduce the risk of family disputes that may trigger challenges to your estate plan. For example, if you decide to leave some of your assets to a friend or organization, a family member who was not aware of your plans might argue that you were coerced into making this decision.
You may not know exactly how much of your wealth will eventually pass to the next generation, but you can make your intentions clear. Whether you’re tackling estate planning for the first time or revisiting an existing plan, an experienced estate planning attorney can guide you through the process and help create a plan that accurately reflects your priorities. Contact Skinner Law.