Where generational views differ on estate planning
Trusts, inheritance for heirs, and open discussions are all more popular with the next gen
$30 trillion: that’s how much Gen X and millennials are each poised to inherit by 2045, according to research from Cerulli Associates.1 In our recent report, the Bank of America Study of Wealthy Americans, we found that many wealthy families consider it their top financial goal to sustain wealth for their future family members – but the youngest generations set it as an even higher priority than their parents do.
Gen Z and millennials are more likely to prioritize passing wealth on
Each generation holds its own views across all kinds of estate-planning matters. These differences aren’t necessarily points of conflict – but they do illustrate shifting viewpoints across aging and emerging adults in families.
The emerging ‘sandwich generation’ embraces estate planning
Older millennials are outpacing their parents and grandparents in their interest in trusts – and they are the most likely to say they understand the role of trusts in estate planning. Eight in 10 of those aged 36 to 42 said they either have a trust or are very interested in establishing one, the highest response across all age groups.
Other recent research has also suggested a surge of interest in estate planning among millennials.2 The uptick could arise from a confluence of factors. As the budding “sandwich generation,” older millennials are increasingly likely to be tending to aging parents while parenting young children themselves. In fact, 92% of the millennials surveyed are parents. They faced a wakeup call that few generations have encountered, parenting through a global pandemic that threatened their own health, that of their children and/or older family members. Recent inflation and market volatility also play key roles, driving more urgency among younger Americans to establish estate planning.
Though the younger cohort is showing interest in estate planning, the fact remains that many wealthy families have not established basic estate documents. Among those with $10 million or more in investable wealth, a quarter do not have any kind of will and nearly half have not established healthcare directives or powers of attorney.
Millennials lead in their interest in estate planning
Has a trust or is very interested in a trust
Say they understand the role of trusts in estate planning quite well
Even among families with $10M+, many remain underprepared
Minding the gap in generational viewpoints
Just as millennials and Gen Z are more likely to name family goals as their top priority for wealth, they are more likely to say that leaving an inheritance is important. 84% of millennials believe it is important to leave an inheritance to children, compared with only 63% of baby boomers. Baby boomers, on the other hand, are even less likely to support an inheritance than their silent generation forebears.
While generations may disagree about the “if,” those who plan to leave an inheritance have little disagreement about the “how.” Nine in 10 wealthy Americans who will leave an inheritance plan to split it equally among children/heirs. Of those who will divide it unequally, most say they will leave a larger share to the child or heir who needs it the most.
On other matters of estate planning, we see differences in what people view as challenges. For those aged 43 and up, Gen X and older, the greatest challenges in estate planning are tax burdens and legal documents. Some also struggle to decide who to appoint as trustee, and some find it hard to have conversations about their estates with family. Millennials and Gen Z, on the other hand, are much more likely to say they wrestle with decisions about what to do with their wealth.
How generations focus on inheritance
Millennials are most likely to say it’s important to leave an inheritance
9 in 10 parents will split inheritance equally among heirs
Difficulties with estate planning also vary by age
Fewer than half of wealthy Americans have talked to their parents about estates, on average. Among millennials, 70% say they have talked to parents about their estate. Among baby boomers, it’s only 46%.— Bank of America Private Bank Study of Wealthy Americans
Talking about estates with children (and parents!)
Baby boomers are not confident that their children are prepared to inherit. Overall, 51% of wealthy parents believe their children are ready to inherit, but among baby boomers, it’s only 45%.
Still, most families have talked to their children about estate matters. The figures correlate to wealth levels; those with more investable wealth are more likely to say they have spoken to children about their estate. Among those with $10M or more in investable wealth, eight in 10 have talked to kids. Among those with $3M to $5M, it’s more like six in 10. There’s also a notable difference in who is doing the talking; women are much more likely than men to say they have spoken to kids about the estate.
Meanwhile, fewer than half of wealthy Americans have talked to their parents about estates, on average. However, this is another area where a generational gap prevails. Among millennials, 70% say they have talked to parents about their estate. Among baby boomers, it’s only 46%.
Family discussions around estate planning
Baby boomers doubt that children are ready to inherit
Women are more likely to speak with children regarding estates
Millennials are most likely to speak with parents about estates
Turning to advisors for guidance
In our research, we found that 75% of wealthy families look to their financial advisors for information on estate planning. The trend depends heavily on generational viewpoint – younger adults are much more likely to turn to family members, friends, social media and traditional media, compared to their older relatives. Still, many younger adults value professional guidance. 71% of millennials and 60% of Gen X said they prefer to do all of their financial business at one firm that can bring together the necessary specialists and services, according to research from Cerulli Associates.
Older cohorts are more likely to seek estate planning info from advisors
Your family and life circumstances evolve over time. A well-crafted estate plan can control and protect your estate and family, as well as include tax-planning strategies. These goals are best achieved working as a team with you, your attorney, your private client advisor team who can help protect and serve the people, passions and causes you love.
Offering broad and deep capabilities in trust and estate planning, Bank of America has a network of 850 client-facing trust and wealth strategies professionals advising clients in the Private Bank and Merrill. As of December 31, 2022, Bank of America is ranked #1 in personal trust assets with $128B under management.3
To read the full 2022 Bank of America Private Bank Study of Wealthy Americans, download the report here.
1 Cerulli Associates. (2022). U.S. High Net Worth and Ultra-High-Net-Worth Markets 2021.
2 Lustbader, Rachel. ‘Caring.com’s 2023 Wills Survey Finds That 1 in 4 Americans See a Greater Need for an Estate Plan Due to Inflation.’ Caring.com, 2023, https://www.caring.com/caregivers/estate-planning/wills-survey/; ‘Demand for Estate Planning Increases As More Millennials Become Caregivers.’ Ettinger Law Firm, 2022, https://www.trustlaw.com/blog/demand-for-estate-planning-increases-as-more-millennials-become-caregivers/ ; Hodder, Esq., Catherine. ‘Covid-19 Is Making Young Adults Think About Estate Planning.’ Findlaw, 2022, https://www.findlaw.com/legalblogs/estate-planning/covid-19-is-making-young-adults-think-about-estate-planning/
3 Top 25 Industry Ranking – Personal Trust Assets Under Management (FDIC call reports, as of December 31, 2022).
A profile of wealth in America
This research was conducted by Bank of America Private Bank in partnership with research firm Escalent. The findings reflect the responses of 1,052 people aged 21 or older, with household investable assets over $3 million. It was designed to be a statistically representative sample of the population in the U.S. that meets these two criteria.