Some bad news for kids with well-heeled, privileged parents! Inheriting large sums of money from wealthy seniors may turn out to be just a pipe dream!
Many of the nation's millionaire baby boomers consider it unimportant to leave their loved ones an inheritance, finds a report released Monday by U.S. Trust, Bank of America's private wealth management division.
“Between now and 2050, there are going to be trillions of dollars of wealth that will transfer to children and other heirs and what’s interesting is high net worth parents worry now that their children are not prepared to inherit wealth that will be theirs one day,” said Keith Banks, president of U.S. Trusts.
National survey of 642 high net worth adults
In a bid to get an insight into wealthy individual’s opinions about the relative importance of leaving an inheritance, the US trust commissioned a survey of 642 Americans whose wealth categorizes them as “high net worth” or above( with invest-able assets of $1 million or more).
Among the respondents, 37 percent held between $3 and $5 million in assets, 31 percent had between $5 and $10 million and 32 percent had at least $10 million in assets.
The study found only 44 percent of millionaire baby boomers think it’s their responsibility to leave financial inheritance to their kids. A majority of these felt bequeathing money will have a positive impact on their children's lives when they die.
Around 32 percent of high and ultra-high net worth Americans said they would rather donate their wealth to charity rather than pass it on to their children.
In addition, 25 percent wanted to enjoy their wealth since they had toiled for it while seven percent believed that won’t have any money left to leave for future generations.
Keith Banks said, “Our survey points to a shift in generational behavior and outlook, most likely shaped by personal experience and societal responses to economic realities."
“The next generation has not experienced the consistently strong economic growth or investment returns that baby boomers experienced during the longest bull market in history.”
Some reasons cited
The prime reason cited for not leaving financial inheritance for their children (57 percent) was that "each generation should earn its own wealth."
Nearly 54 percent felt they would rather invest the money in their kids while they were growing up (scholarship funds at local high schools and colleges).
Other reasons people gave for not passing on wealth included the need to fund their own health care or using it "to solve difficult social problems."
The study found some baby boomers were ready to part with a small slice of their wealth but not the entire estate.
Glenn Walker, a 65-year-old respondent from northern Kansas with two kids stated, "They will inherit something, but both children seem to be doing fairly well."
"And I think they -- and we -- all believe that if you've made your money here in the American system and you love this country, it's okay to share some of that wealth with others outside of your family."