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Women are playing key role in family wealth transfer

Women own and control more wealth now than ever before and are increasingly the main source of family wealth. When it comes to financial decision-making and investing, women tend to include emotions in their analysis more often than men, which impacts areas like charitable giving and goals prioritization.

Investopedia‡ estimates that $30 trillion in wealth will be passed down in the next three to four decades, and women are rapidly controlling more of that money. An Investment News‡ special report on women and investing estimated that up to $25 trillion will be passed to women through 2030, through inheritances from either parents or spouses.

That same survey also found that 18% of women own an impact investment—investments that address social and environmental concerns— while only 10% of men do. Similarly, women are 33% more likely than men to invest to express social, political and environmental values. Women look at money differently than men and when it comes to leaving a legacy and transferring money to their children, it’s important to have a communication plan in place.

How to broach the subject of transferring wealth to your children and grandchildren

Money used to be a taboo topic—your great-grandparents and grandparents would never consider discussing with the next generation. However, times have changed—and so has the perspective on these conversations. People want to talk about finances while they’re still able to, so that they can leave a legacy they are proud of.

Studies show more women are asking questions, want to be educated on wealth management and are increasingly seeking out an advisor for financial help. Creating a plan to talk about the transfer of money and your wishes will help ensure a seamless transition. Discussing your strategies with beneficiaries ahead of time can also eliminate confusion, frustration and hurt feelings.

With money comes responsibility and expectations

Educating your beneficiaries on the responsibilities that come with inheriting wealth is important, particularly if you would like your wealth to live beyond the next generation. As you formulate strategies to leave your hard-earned assets to loved ones, you may wish to structure a plan that provides financial security for not only your immediate heirs, but theirs as well.

Draw on your own experiences and knowledge to help educate your children to ensure they have strong financial fundamentals, which may include an understanding of the importance of giving back. Empowering the next generation will make you feel more confident in your plans and their impact.

Start the conversation early

Your children need to be old enough to understand the information, but you can begin talking with them about areas like philanthropy as early as grade school. For example, if your family makes an annual donation, you can involve your children in choosing recipients. Discuss causes that are important to them. Maybe they love pets or want to help give other kids presents for the holidays. Talk about it and let them help pick who you support.

As your children enter the high school years, you can work with your banker or financial advisor to help introduce fundamentals like budgeting and personal cash flow management. Then, as your children get older, talk with them about impact investing. Now, more than eight in 10 investors express interest in sustainable investing. If this is important to you and your family, teach your kids how to make informed decisions about how their money supports these causes, whether through investing or charitable giving.

Share the strategy

Wealth advisors, or financial planners, generally start the conversation with the older generation about how to share their estate planning details. This is one of the most significant services these advisors provide because they can assist in explaining the estate plan structure, and many times will facilitate the conversation about the strategy. Your children or grandchildren may have a lot of questions about the trusts and the strategy behind them, and an early conversation through an objective advisor can help avoid misunderstandings.

Whether to ensure strategic wealth disbursement or to enable your beneficiaries to mature before accessing funds, it’s important to make your estate planning decisions from a comprehensive planning standpoint. Intergenerational wealth transfer is a complicated process—it can be nuanced for different family members and emotions are always a factor.

Your wealth advisor can proactively counsel and assist in both building your strategy and communicating amongst generations. Having these conversations can be the difference between just leaving a gift and establishing a legacy.

Interested in learning more about our Private Wealth Management division? With UMB, you have a guiding partner from financial advising and wealth building strategies, to retirement and legacy preservation plans.

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