(UBS)
With a total of USD124 trillion expected to be transferred through 2048 in the US—and USD105 trillion of this going to heirs—many families wonder how to arrive at the right amount to leave to their children and others.*
Part of deciding how much is enough begins with acknowledging the impact it will have on the entire family. An inheritance can be a wonderful opportunity for children to pursue their dreams or take risks they might not have considered. This financial support can:
- Provide a sense of security;
- Open doors to new possibilities;
- Lighten the burden of living expenses;
- Build influence within a community through philanthropy.
An inheritance can also carry unintended consequences that are equally important to consider. It might inadvertently:
- Create dependency;
- Reduce motivation to achieve personal goals;
- Lead to conflicts amongst family members over the distribution of wealth.
Finding your wealth identity
How was money discussed in your home? Did children receive an allowance? Personal beliefs about money, and shared money values and messages within the family, play a crucial role in family culture and thinking through how much is enough for your children. For example:
- A parent who believes self-worth is tied to financial success might require their children to earn their inheritance as a reward for hard work;
- A parent who believes in working hard or “paying your dues” may structure inheritances to encourage responsibility;
- A parent who worries that an inheritance can stifle ambition might leave a modest amount or tie the inheritance to educational or entrepreneurial achievements;
- A parent who views wealth as a means to ease life’s burdens may provide a substantial inheritance to ensure long-term security.
These beliefs, along with considerations of work ethic, values and philanthropy, guide how inheritances are planned and implemented.
Communicating effectively
When thinking through the potential impact of an inheritance, effective communication is key. It can serve as an antidote to conflict. When determining the amount to leave to the next generation, start conversations with your partner (if applicable), and then, with your children.
Keep in mind that this can be an iterative process. Successful communication around your intentions is two-way and multi-generational. These foundational conversations build family cohesion, which in turn strengthens the family culture.
Families need to be clear about their own money values, current financial situation and hopes for the future. Articulating values around money and wealth helps decide what to pass on to children and what no longer serves the family. Unless you tell your children to expect differently, your lifestyle choices—the cars you drive, the homes you live in, the places where you vacation—will shape their expectations.
From wisdom to action
We know families can flourish when each generation understands both the opportunity and responsibility that an inheritance can bring. Estate planning conversations tend to focus on the transactional nature of the plan: what financial instruments are being utilized and who is receiving distributions from the estate and how. These conversations should also serve as an opportunity to provide guidance and share your thoughts and values.
It's important to talk about your decisions and why you made them. Make sure you have a solid plan and share it with those who need to know, explaining your reasons clearly and being open to questions and feedback. It is important also to be willing to adjust the plan if needed down the road.
For additional considerations and reflection questions around family wealth transitions, download our whitepaper, How much is enough? Guidelines for finding the right balance to reflect your family values . And speak with a UBS Financial Advisor about strategies to transfer wealth to others as part of your legacy.
- The Cerulli Report—U.S. High-Net-Worth and Ultra-High-Net-Worth Markets, 2024.
