What the Great Wealth Transfer Means for Financial Advisers

A financial adviser talks with an older couple at their dining room table. — (Image credit: Getty Images)

The Great Wealth Transfer is underway and will continue to have an impact on familial wealth over the next two decades. While awareness of this transfer may be high at this point, financial advisers play the critical role of ensuring their clients take action to follow through on suggested strategies to safeguard wealth.

And there’s room to improve as, according to research by Northwestern Mutual, just 26% of Americans expect to leave behind an inheritance.

Wealth transfer isn't just a financial issue; it’s a deeply personal process that can profoundly impact family relationships. Estate planning is complex and carries significant emotional weight, especially for families with substantial assets. When developing an estate plan, the goal is to minimize conflict while ensuring each family member is cared for. Remember that you are one of your client’s most valuable resources.

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Since the topic is emotionally charged, your clients may not want to tackle it. However, it is essential that you proactively raise estate planning with clients and encourage them to act before it’s too late in order to fully leverage planning strategies.

Estate planning is also logistically challenging. Even well-meaning plans can crack under pressure, leaving heirs to deal with unnecessary stress and legal entanglements. As a financial adviser, your expertise provides guidance and offers a critical, unbiased perspective to help families navigate this difficult but necessary process.

Where to begin when developing an estate plan with your clients

I have seen many instances of both successful and detrimental wealth transfers throughout my career. I recall a case in which an estate plan left a family member in control of a significant inheritance, but the individual failed to follow proper procedures or document decisions. This lack of discipline and consistency created costly problems for the heirs, including multiple trips to court.

Unfortunately, this situation is not uncommon. When estate plans are not executed properly, they can become more expensive and time-consuming than if they had been handled properly.

Often, the family member assigned to oversee a plan lacks the specific financial expertise needed to manage a wealth transfer, despite how smart they might be. While you might be aware that it is crucial to involve professionals who specialize in estate planning, your clients might think otherwise. Encourage them to consider both the emotional impact and the logistical challenges of wealth transfer early in the planning process. These two sides of estate planning are distinct and require separate but equally thoughtful strategies.

A helpful way to broach this topic is to reference the Great Wealth Transfer to ease into a broader estate planning conversation. When guiding your clients through estate planning, the following considerations are helpful to keep in mind.

Clearly define ownership and roles. When dealing with multiple heirs — particularly with complex assets like real estate or family businesses — it’s vital to establish a structured plan. Will your children share ownership equally, or will some buy out others? Details like these should be discussed now to prevent future disagreements. A well-defined strategy ensures everyone knows their roles and responsibilities.

Family buyout provisions. Pre-arranged buyout options can be a lifesaver if one heir wants to sell an asset while another prefers to keep it. These provisions help maintain family harmony and provide a clear path for handling such disputes.

Regularly update estate plans. While your client may already have an estate plan, ask when it was created. Laws are routinely updated, and major life events can change minds. For example:

Life changes. Significant life events — like marriages, divorces, births or deaths — should prompt an immediate review of an estate plan. Many people neglect to make these updates, leaving outdated beneficiaries or instructions that no longer reflect their intentions.
Tax law changes. With ever-evolving tax laws, failing to adjust an estate plan can lead to higher taxes or missed opportunities for savings. Keeping up with these changes is crucial to maximizing your client’s wealth.

Plan for liquidity needs. Ensure there is enough liquidity (cash or easily sold assets) to cover estate taxes, pay off debts or fund family buyouts without having to sell cherished assets. A lack of liquidity can force heirs into difficult decisions at emotionally vulnerable times.

Understand tax implications. Estate taxes can be significant if not planned properly. High-net-worth families often underestimate the importance of tax mitigation strategies, such as trusts or strategic gifting. You must be proactive in exploring these options with your clients.

How to initiate estate planning conversations and why they matter

Estate planning conversations are inherently sensitive but avoiding them only increases the risk of family conflict. Many clients struggle to start these discussions, fearing hurt feelings or assuming that “everything will work out.” In reality, transparency about their wishes and expectations makes for a far smoother transition.

Encourage your clients to begin by reflecting on their values around wealth and legacy. Asking simple, open-ended questions about what they hope to achieve can open up meaningful dialogue. These conversations shouldn’t be put off until health declines or an unexpected event occurs. The earlier an estate plan is finalized, the more flexibility your clients will have to structure their legacy effectively.

Don’t wait for clients to initiate the topic; take the lead. As a financial adviser, you can facilitate these discussions alongside other professionals, like trust officers and estate attorneys. Your role is to balance financial strategy with family dynamics, guiding clients toward a comprehensive plan that meets both practical and emotional needs.

Estate planning isn’t just about managing assets; it’s about preserving relationships and protecting family bonds. Addressing these issues thoughtfully and with the help of a team of professionals ensures that your clients’ wealth can be a blessing, not a burden, for future generations. By proactively discussing estate plans, you can help your clients mitigate potential conflicts and secure their legacy.

Remember, you are there to guide your clients through this delicate and complex process. Encourage them to arrange family meetings, review their estate plans regularly and explore trust structures that align with their goals. Above all, recognize the personal and nuanced nature of estate planning and handle each case with the care it deserves.

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Doug Sherry is the President of Arden Trust Company and serves on its Board of Directors. He has more than 20 years of management experience and joined Arden Trust in 2021. At Arden Trust, Doug is responsible for full P&L, the continued growth and health of Arden Trust and ensuring clients receive the highest level of service possible. These responsibilities include all fiduciary matters, the stability of platform and services, compliance and management of all branch administration. With over 30 years of experience in the financial services industry, Doug has championed powerful growth initiatives to achieve organizational excellence throughout his career.