Financial advisors and the philanthropy world have been watching wealth transfer carefully for the last 20 years.
That’s since John Havens and Paul Schervish of Boston College first published their 1999 report estimating $41 trillion would be transferred over 55 years.
Havens and Schervish defended their wealth transfer model over the years, but their final update was in 2014. The researchers retired in 2015.
As you might expect, interested parties have continually questioned whether the “Great Wealth Transfer” is actually happening or not.
Boomers seeing wealth transfer
A recent Bloomberg article by Ben Steverman offers at least a partial answer: “Boomers are Thriving on an ‘Unprecedented’ $9 Trillion Inheritance.”
Citing research from United Income, Steverman notes that the total value of inheritances has increased dramatically from 1989 to 2016. Americans inherited $427 billion in 2016 (the most recent data available) up 119% from the $195 billion inherited by U.S. households in 1989 even after adjusting for inflation.
Americans inherited a total of more than $8.5 trillion from 1989 to 2016. The United Income report estimates an additional $36 trillion will be transferred over the next 30 years. (Other research puts the figure even higher!)
Much of the $8.5 trillion has gone to older heirs, the Boomers, adding to a growing generational wealth gap.
Giving during lifetimes
The United Income report doesn’t measure a key development: giving while donors are living.
In other words, particularly among the ultra-high net worth segment of the population, a significant portion of wealth transfer is taking place during life. That’s instead of what researchers usually measure—inheritances and charitable bequests at death.
The net effect is that not all the wealth transfer can be as easily tracked.
Regardless, as the prior generations age and pass away, the transfer will only pick up the pace.
Read these other posts related to inheritance and wealth transfer!
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Published January 3, 2020