A recent study of America’s wealthy by private bank U.S. Trust has found that generational gaps in attitudes about leaving an inheritance have narrowed, and that work ethic and the transfer of financial skills and knowledge have the greatest influence on the next generation.
The survey found that only one-quarter of all survey respondents attribute the majority of their wealth to an inheritance, and that those who have inherited wealth are more likely to want to leave an inheritance themselves. Seventy-seven percent of people who inherited the majority of their wealth, and 63% of those who earned it, consider it an important goal to leave a financial inheritance to the next generation.
The survey also found that two in three baby boomers do not expect to receive an inheritance, but 57% of adults under the age of 32 do expect an inheritance. Sixty-four percent of baby boomers, compared to 78% of adults younger than age 32 and 72% of those over age 68, think it’s important to leave an inheritance.
There are concerns over how well the next generation will cope with their newly acquired wealth, with only two in five wealthy parents (42%) agreeing strongly that their children are/will be well-prepared to handle their inheritance. Few wealthy parents believe their children will be mature enough to handle their wealth before the age of 25.
Many families are choosing not to clarify the true extent of their wealth, with just 39% of parents whose children already are age 25 or older saying they have fully disclosed their wealth to children, while 53% have disclosed just a little and 8% have disclosed nothing at all.
The two most common reasons for not disclosing wealth to children are:
- overall aversion to the topic, having been taught never to discuss wealth with anyone; and
- parents’ concern that disclosing information about family wealth will negatively affect their children’s work ethic.
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