Here’s How Families Worth $50M+ Are Passing on Their Generational Wealth

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We are in the midst of the “great wealth transfer” — over the next decade, $84 trillion in assets will be handed down to millennials and members of Generation X. Transferring wealth efficiently and effectively requires proper planning, and perhaps even more so when the level of wealth you are transferring is so high.

To gain insights into how super-wealthy families are handling the great wealth transfer, the Merrill Center for Family Wealth surveyed 270 individuals from families with $50 million or more in assets. The learnings from this rarely-studied demographic provide valuable lessons for all families navigating the complexities of intergenerational wealth.

Here’s a look at some of the most important findings, and what families of all wealth levels can learn from them.

Ultra-High-Net-Worth Families Are Having Open Conversations About Money — but They Could Be More Strategic About It

The survey took place between November 2020 and July 2023 and found that the COVID-19 pandemic sparked more conversations about money for many of the families. One in 3 respondents (33%) said they had increased conversations about family wealth during the pandemic.

Perhaps surprisingly, most of these conversations were unplanned. More than three-quarters (78%) reported having spontaneous conversations about wealth. But this isn’t necessarily a good thing — 26% of those who have had these conversations said they regretted it after the fact.

“A huge part of what we do within our team is helping families structure these conversations and think through them,” said Valerie Galinskaya, managing director and head of the Merrill Center for Family Wealth. “Spontaneous doesn’t always yield the best outcome.”

Galinskaya said that a big issue among families of all wealth levels is the belief that talking about money has to be an all-or-nothing thing.

“Many people think about it as a binary choice, almost like a light switch — you’re either on or you’re off,” she said. “You’re sharing information with your kids or not. For us, our effective approach is a dimmer switch. And what I mean by that is slowly turning on the lights — a disclosure with purpose.”

For example, if you are talking to your children about your will, explain the purpose of the will, what pieces are at play, and the actual monetary amounts at stake. It’s important to talk about one aspect of your wealth at a time, and whatever money conversation you are entering into, it’s important to plan it out.

“We found that when individuals follow that path, the rate of regret is much, much lower,” Galinskaya said.

Ultra-High-Net-Worth Families Are Involving Multiple Generations in Financial Decision-Making

The survey found that for about half of respondents (48%), financial decision-making is shared among two or more generations. While this can be a good thing, some respondents felt that they did not have the skills necessary to make these decisions. The survey found that 20% admitted that their family has limited skills to co-manage shared assets, such as a family vacation home or other tangible property, investments or business enterprise.

“The biggest challenge is, I don’t have the skills to manage these assets — meaning financial skills, wealth skills,” Galinskaya said. “There are undefined expectations around, what’s my role? What’s my responsibility? Shared decision-making is happening in most families, yet most acknowledge that they don’t have the skills to do that.”

Ultra-High-Net-Worth Parents Are Passing Along Their Wealth While They Are Still Living

Many high-net-worth families are not waiting to transfer wealth upon their passing. The survey found that 83% of families provide some sort of ongoing support for adult children or other heirs, including 39% who provide recurring lifestyle support, such as payment of living expenses and repayment of debt or loans.

When this is the case, Galinskaya said that it’s essential for parents to clearly outline their expectations.

“It’s the prerogative of every parent [to decide] what they do with their assets, but the majority of clients that are providing some kind of recurring gifting [are] typically [doing so] without any boundaries,” she said. “There’s no conversation around, I’m giving you this for this period of time. And we’ve seen a lot of client examples where that can create financial dependence [or] conflict over perception of fairness if there are other siblings that are not getting it. It could really be a hotbed of tension and conflict in a family.”

Wealth Transfer Tips for Families of All Net Worth Levels

Most of us do not have $50 million-plus to pass along to future generations, but there are still some key takeaways that can be applicable to many families who are planning to transfer wealth. The first is to openly communicate your plans for your assets with your family members.

“Whether you have $100 million, $1 million or less, identifying what is the purpose of your assets is really important,” Galinskaya said. “For example, there’s a family I’m working with now. They were really struggling with, how much do we give to our kids? We sat with them and they said, the purpose of our wealth is to help our children, but they also wanted the children to be able to be self-sufficient. It wasn’t until they identified that that they were able to make some planning decisions.”

Another important planning step is to designate members of your family to be the decision-makers when it comes to handling how your wealth will be distributed.

“For example, for an ultra-high-net-worth client, that may mean if you have a trust, who is the trustee? How will decisions be dealt with?” Galinskaya said. “For somebody who is lower net worth who maybe doesn’t have a trust, somebody would still have a will or power of attorney or healthcare proxy. How you want decisions to be made is really, really important.”

Finally, it’s important to work on your financial literacy so that you are prepared for any transfer of wealth.

“As I mentioned, earlier, when we surveyed the respondents, they said they lack the skill to manage assets — it’s not just the investment or the financial [skills], but governance, business and philanthropy,” Galinskaya said. “It’s the families who focus on learning that are the ones that ultimately are able to have not just greater financial success, but peace of mind.”