Successful Wealth Transfer Starts With Conversations | Northern Trust Successful Wealth Transfer Starts With Conversations | Northern Trust
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Successful Wealth Transfer Starts with Conversations

Research from The Northern Trust Institute provides insight on how today’s high net worth families plan to transfer wealth and identifies shared characteristics of those families poised for success.

1

Everyone benefits from detailed conversations about wealth

Sharing details about an eventual inheritance and working together as a family to prepare helps pave the way for a successful transfer of wealth.

Respondents who stated the next generation has a clear understanding of what they will inherit feel better equipped to succeed across a number of factors.

diagram_1920px_chart-01 The next generation is prepared to manage wealth I have put strategies in place to minimize taxes I will be able to leave a legacy I have a disciplined process to prepare the next generation for their future decision-making role The next generation is prepared to make decisions pertaining specifically to shared assets 74% 75% 68% 78% 59% 28% 62% 50% 29% 4% Respondents who believe the next generation understands what they will inherit Respondents who do not believe the next generation understands what they will inherit
diagram_375px_chart-01 The next generation is prepared to manage wealth I have put strategies in place to minimize taxes I will be able to leave a legacy I have a disciplined process to prepare the next generation for their future decision-making role The next generation is prepared to make decisions pertaining specifically to shared assets 74% 75% 68% 78% 59% 28% 62% 50% 29% 4% Respondents who believe the next generation understands what they will inherit Respondents who do not believe the next generation understands what they will inherit

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2

Family comes first, but it is not the only goal

Maintaining lifestyle and providing for children and grandchildren are ranked among respondents’ most important goals, but philanthropy and tax management also matter to almost half of respondents.

When thinking about your goals for your wealth, which of the following are the most important to you?

diagram_1920px_chart-02 Maintaining my lifestyle Providing for my children/grandchildren Charitable giving and philanthropy Reducing my tax burden Having a positive social/environmental impact Pursuing entrepreneurial interests Other 83% 70% 48% 48% 23% 10% 4%
diagram_768px_chart02 Maintaining my lifestyle Providing for my children/grandchildren Charitable giving and philanthropy Reducing my tax burden Having a positive social/environmental imact Pursuing entrepreneurial interests Other 83% 70% 48% 48% 23% 10% 4%
diagram_375px_chart-02 Maintaining my lifestyle Providing for my children/grandchildren Charitable giving and philanthropy Reducing my tax burden Having a positive social/environmental impact Pursuing entrepreneurial interests Other 83% 70% 48% 48% 23% 10% 4%

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3

Financial education helps, but more work may be required to instill confidence before transferring wealth.

While most respondents (79%) indicate they have provided their children with access to financial education, half (48%) are still concerned for the preparedness of the next generation to manage wealth.

diagram_1920px_stats-03 79 48 % % Indicate that they have provided their children with access to financial education Are still concerned for the preparedness of the next generation to manage wealth
diagram_768px_stats-03 48 79 % % Are still concerned for the preparedness of the next generation to manage wealth Indicate that they have provided their children with access to financial education
diagram_375px_stats-03 79 48 % % Indicate that they have provided their children with access to financial education Are still concerned for the preparedness of the next generation to manage wealth
4

High net worth individuals have a strong commitment to community – and reap the benefits.

A majority of HNW investors (85%) plan to support charitable causes, with half (52%) indicating their wealth will be able to help philanthropic causes important to them. But the benefits do not stop there:

diagram_1920px_stats-04 81 76 % % Are confident their children are prepared to make a positive impact with their wealth Believe they will be able to leave a legacy
diagram_768px_stats-04 76 81 % % Believe they will be able to leave a legacy Are confident their children are prepared to make a positive impact with their wealth
diagram_375px_stats-04 81 76 % % Are confident their children are prepared to make a positive impact with their wealth Believe they will be able to leave a legacy

Not only do high net worth individuals have the means to be philanthropic, they are also genuinely motivated to extend their generosity to those around them.

What are your motivations for charitable giving?

diagram_1920px_chart-04 I want to give back to my community % Top Motivation I want to instill charitable/generous values in my children I want to make an impact/change the world I want to support those organizations that have helped my family I want to avoid paying more taxes I want to honor my family or loved one Other 40% 40% 40% 14% 5% 6% 8% 65% 40% 38% 29% 28% 22% 9%
diagram_768px_chart-04 I want to give back to my community % Top Motivation I want to instill charitable/generous values in my children I want to make an impact/change the world I want to support those organizations that have helped my family I want to avoid paying more taxes I want to honor my family or loved one Other 40% 40% 40% 14% 5% 6% 8% 65% 40% 38% 29% 28% 22% 9%
diagram_375px_chart-04 I want to give back to my community I want to instill charitable/ generous values in my children I want to make an impact/ change the world I want to support those organizations that have helped my family I want to avoid paying more taxes I want to honor my family or loved one Other 65% 40% 38% 29% 28% 22% 9% % Top Motivation 40% 40% 40% 14% 5% 6% 8%

 

 

Disclosures

© 2024 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability in the U.S.

This information is not intended to be and should not be treated as legal, investment, accounting or tax advice and is for informational purposes only. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting or tax advice from their own counsel. All information discussed herein is current only as of the date appearing in this material and is subject to change at any time without notice.

This information does not constitute and should not be understood as a recommendation with respect to the rollover, transfer or distribution of assets from an existing retirement plan or IRA account of any kind, including, without limitation, whether, in what amount, in what form, and to what destination such a rollover, transfer, or distribution should be made.

Plan, with purpose. 

Planning with Purpose is a three-part process developed by The Northern Trust Institute, to be conducted in collaboration with clients and their attorneys, to help ensure wealth plans reflect the goals and intentions of each unique family

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