We added over 1,000 new billionaires a day last year, the report says
Last year, wealth grew rapidly in the United States. There, more than 379,000 have become new US dollar billionaires with more than 1,000 per day, a recent report shows.
There is great wealth and great responsibility.
In a 2024 report, market researcher Cerulli Advisors said the baby boomer generation will give its heirs an astounding $124 trillion until 2048. But are the next generation ready to accept that, or will “season a shirt like a shirt in three generations”?
It depends on the work that both Givers and Receiver do before the handoff, experts say. Without proper communication, guidance and planning, wealth and heritage are taxes, waste, conflict, or simply forgotten. A 20-year research project on 3,200 families by the Wealth Consultancy Williams Group shows that 70% of wealthy families have lost wealth by the second generation, and 90% have lost wealth third.
“Money and wealth can hurt beneficiaries in many ways, but the ways in which you can help money and wealth are just as vast,” says Gillin Hesberdon, team leader of Frostbrown Todd’s Family Office Practice.
What is the most important step to smoothing out the transfer?
Lack of communication and trust within the family is the main cause of wealth transfer failure (60%), with 25% being due to the heir’s inadequate preparation, knowledge, and skills to manage succession.
“We are pleased to announce that we are committed to providing financial planning for our customers,” said Jennifer Bake, head of Mercer Advisor’s Financial Planning Group.
According to the National RBC Wealth Management Survey, two-thirds of givers admitted to postponing conversations moving family wealth. Only 39% provide instructions to heirs about what succession should be.
Almost all beneficiaries (99%) respect the wishes of their beneficiaries and want to be good stewards of their family’s wealth. But their biggest concern is that they are financially responsible for what they inherit. Only 54% of them said they were ready to receive the inheritance.
Can beneficiaries hold talks or are they sticky?
Yes, if Givers are reluctant to discuss money, heirs can encourage and frame consultations with family dynamics in mind, Hess-Verdon said.
“If ‘children’ are worried about siblings and families who are constantly seeking money or ‘loans,’ this can be a difficult subject to raise with parents,” she said. “However, responsible families who have their own estate plans and hold future meetings with lawyers can often seek advice from their parents when making these decisions, and parents often relay the important plans they have set up with their lawyers as examples.”
Advisors, lawyers and accountants are third parties who can help neutralize conversations and keep them focused on planning, experts said.
Beneficiaries don’t need to rely on the same professional as their parents or grandparents. They should find someone they feel comfortable with, Bake said.
“First generation and second generation are involved differently,” she said. “The second generation is more digitally native and interfaced and interacts with investment options. The first generation may have everyone in the building, lawyers and accountants.”
How else can be a beneficiary help themselves?
“Financial literacy is important for young people,” said Jennifer Quent, director of Family Office Services at Kaufman Rossin.
She said that the wealthy families of nets with complex real estate often use their family offices to help. Heirs may have to learn about different types of trust, taxes and gifts, and there is a lot of education involved,” Quento said.
Family Office is a private asset management company that helps wealthy families manage everything from investment, tax and legal affairs to charity, everyday concierge services, and even real estate planning and education with heirs. There are various levels of family offices, but are usually reserved for families with a net worth of at least $30 million.
For those with fewer resources and fewer complex properties, virtual family office tools like Leafplanner and Farther Financial could help families collect, organize, store and communicate documents and plans, Quent said.
Without knowledge of assets, where they are and what their plans are, or who calls to discover, receivers may think they have to make all these big decisions within nine months “of someone else’s death,” Baick said.
Medora Lee is a money, market and personal finance reporter for USA Today. You can contact her at mjlee@usatoday.com and subscribe to our free daily money newsletter for personal finance tips and business news every Monday to Friday morning.
