Key Highlights:

• Millionaire Millennials and Gen X are more than twice as likely to prefer sharing their wealth with the next generation during their lifetime compared to millionaire Boomers.
• Three in five wealthy Americans who intend to pass on wealth say they started planning their wealth transfer before the age of 45, and more than half started planning once they had a net worth of at least $1 million.
• Younger wealthy Americans are significantly more likely to stipulate how their wealth can be used by future generations.

A generational shift is emerging among wealthy Americans planning to pass their wealth, according to Schwab’s new survey of more than 1,000 high net worth¹ (HNW) Americans, as younger wealthy Americans break from tradition by opting to transfer their wealth during their lives, rather than waiting until after death. They’re also planning a more prescriptive approach to how their wealth is used.

Schwab’s survey shows that among wealthy Americans, defined as those with more than $1 million in investable assets, 97% plan to transfer their wealth, with 36% preferring that the next generation enjoy their wealth while they’re still living and 39% preferring to preserve their money for the next generation until after they pass away.

Wealthy Millennials and Gen Xers are more than twice as likely to say they want to share their wealth with the next generation during their lives compared to millionaire Boomers, who are more likely to say they want to enjoy their money themselves during their lifetime. Younger wealthy Americans expect to distribute over twice as much of their wealth while alive compared to wealthy Boomers.

Overall, three in five (61%) wealthy Americans say that passing at least some of their wealth during their lifetime is important because they can help provide financial support and assistance to their beneficiaries (46%), share in their joy, and make memories together (36%). Most wealthy Americans anticipate a mix of both approaches, with plans to distribute about 40% of their assets during their lives and leave the remainder to pass after death.

“Schwab serves over a million multi-millionaires, and as they move from building wealth to preserving and passing it, we see an increasing need for specialized services and support around estate planning, wealth transfer, and legacy planning,” said Andrew D’Anna, Managing Director of Retail Client Experience at Charles Schwab. “According to our survey, younger Americans could be poised to reshape legacy planning and the future of how wealth is passed to the next generation. Understanding the changing dynamics underway, we are continually evolving and enhancing our services, such as increasing access to tax, trust, and estate planning specialists, creating self-serve digital experiences to help clients manage inheritance tasks, building out our planning and educational resources specific to this significant life event, and encouraging engagement and discourse across family members and generations.”

Wealth Distribution and Family Dialogue

On average, wealthy Americans who plan to pass their wealth estimate they will distribute about $4.1 million in assets, with about 40% of that value in the form of real estate ($1.6 million), and the rest in investments (31%), cash (18%), and death benefit proceeds from life insurance (11%). The vast majority (85%) feel that the amount is “enough.” Ultra-high net worth (UHNW) Americans, those with more than $10 million in investable assets, plan to pass on significantly more, reporting an average value of $11.9 million, with one in five (23%) fearing they may be giving too much to their heirs.

Three in five wealthy Americans (63%) who intend to pass on wealth say they started planning their wealth transfer before the age of 45 and recommend others do the same. In terms of assets, more than half of wealthy Americans (56%) started planning once they had a net worth of $1 million or more. About half (49%) agree that people should start planning even if they have a net worth below $1 million.

Most wealthy Americans plan to distribute their wealth primarily across their spouse or partner, children, and charities, and most have communicated their plans with their beneficiaries, particularly their spouse (92%) and children (78%). Those surveyed largely have important documents in place to facilitate their wealth transfer, including wills (57%), powers of attorney (38%), and trusts (34%). More than half have worked with a financial advisor (56%) or an attorney (55%) to prepare their documents.

According to wealthy Americans, the top reasons someone should create a plan are wealth and asset protection (56%), eliminating conflicts between the recipients (44%), avoiding probate court (43%), and minimizing taxes (39%).

“It’s encouraging to see that a majority of wealthy Americans who plan to pass their wealth have started to formalize those plans and documents and communicate with their families,” said Susan Hirshman, Director of Wealth Management for Schwab Wealth Advisory and Schwab Center for Financial Research. “In addition to those foundational steps, we encourage families to ground discussions and planning around shared values and goals for wealth being transferred. These conversations can help heirs see themselves as wealth stewards, rather than just beneficiaries, and gain important perspective on the meaning of wealth, legacy, and the responsibilities that come with it.”

Legacy with Limits

Seventy percent of wealthy Americans who plan to pass on their fortune also use the wealth transfer process to stipulate how their wealth is used, such as setting an age at which the money can be accessed (34%), selecting recipients for specific items (29%), and specifying how the money can be spent (27%).

Nine in ten UHNW Americans stipulate how their wealth is used, and they often have stricter guidelines, such as requiring certain life milestones for distribution, mandating that funds be used for familial responsibilities, and maintaining career performance to access funds.

Younger wealthy Americans are more likely to provide their wealth with strings attached compared to older generations. Nearly all Millennials (97%) and Gen X (94%) have stipulations included in their wealth transfer plans, compared to only one in three Boomers (34%). Millennials are most likely to stipulate how money can be used (43%), while Gen X is most likely to set an age for when the money can be used (46%).

“It’s common for those who have built their wealth over time to want to have a say and guide how those assets are used, with benefits and safeguards for future generations top of mind,” said Hirshman. “We often see wealthy families add stipulations to help protect and preserve assets for multiple generations, encourage self-driven financial responsibility, and uphold long-term family values. They’re really trying to ensure that the family wealth has a positive impact.”

See the detailed results from Schwab’s survey of HNW Americans here.

About Schwab’s High Net Worth Investor Survey

The online survey was conducted by Logica Research from August 8, 2024, to September 2, 2024, among a national sample of 1,005 wealthy Americans with $1 million or more in investable assets, including 105 UHNW investors with $10 million or more in investable assets. All respondents were aged 18 or over.

Disclosures

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or geopolitical conditions.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 36.1 million active brokerage accounts, 5.4 million workplace plan participant accounts, 2.0 million banking accounts, and $9.85 trillion in client assets as of October 31, 2024. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, https://www.sipc.org), and its affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products.

More information is available at https://www.aboutschwab.com. Follow us on X, Facebook, YouTube and LinkedIn.

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¹ High net worth is defined as having more than $1 million in investable assets.

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