How to Prepare Your Heirs for a Successful Wealth Transfer

Open communication plays a vital role in protecting your money

Prepare your heirs for a successful wealth transfer

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Wealth transfer is the passing on of assets to one's beneficiaries, oftentimes one's children. As one generation ages, their accumulated wealth is passed to their offspring at their passing. But wealth transfers are by no means simple or easy. In fact, they can create a great deal of tension within families. Aging parents and grandparents have their own ideas about how they'd like to bequeath their money and some do not wish to pass down any money at all.

The receiving generations, too, have ideas on how an inheritance should be spent. And since they may still be in the early phases of their careers and their own accumulation of wealth, they might not have enough experience in the guardianship of significant sums, which sets up the possibility of conflict. Learn how families can avoid these obstacles and prepare for a successful transfer of wealth.

The Great Wealth Transfer

As the Baby Boomer generation ages, America is poised for the greatest wealth transfer period in its history. An expected $68 trillion is expected to change hands over a 25-year period, transferring from the Baby Boomers to Generation X and Millennials, as well as charitable organizations.

In order for these transfers to occur successfully, both parties must prepare adequately, with plenty of communication to avoid problems.


Up to 60% of wealth transfers are squandered or otherwise fail due to lack of communication or trust; you can lower that percentage for your family by taking the appropriate steps ahead of time.

Tips for Preparing Your Heirs for a Transfer of Wealth

To increase the chances of a successful wealth transfer, you can open the door to healthy communication and be honest with your heirs. Here are some tips to make the transition easier.

Share the Details

Tell your heirs about your financial details. While it's easy to avoid talking about your personal finances with others, even with loved ones, you need to be sure that your heirs are familiar enough with the details of your estate so they can assume management or oversee the assets after you’re gone. 

Invite Participation

You might involve your heirs in the estate planning process. This will help to generate discussion about how your estate will be passed down.

If you are passing along a business or large investment, you could talk with your heirs about your values and hopes for these assets. Clarify now so they won’t be left guessing later.

Keep Your Files in Order

Organize your financial documents and keep them in one location. You don’t want your heirs to have to scramble to find different parts of your estate. Keep all of this information in a safe location and let your heirs know where it’s located.


Documents to have on hand include financial account statements, share certificates, loan and mortgage paperwork, real estate ownership papers, business interest documents, information on revolving accounts, life insurance information, and any other relevant financial details. Also be sure to include up-to-date legal documentation, including a will, a power of attorney and beneficiary designations.

Speak to a Trusted Advisor

This can play a vital role in ensuring a successful wealth transfer. By engaging the entire family, a family advisor can help craft a plan with the long-term goal of helping the next generation thrive. Many family advisors will conduct speaker series about raising financially-responsible children. They can also provide advice about philanthropy, gift-giving strategies, or creating a family foundation.

Help build the relationship between your heirs and your financial team (financial advisor, estate planning attorney and CPA). By helping to forge this relationship early, your heirs will have resources to turn to if the transfer of wealth gets complicated. It will also help prepare them for their future roles and all that the inheritance will bring.

Plan How the Money Will Be Used

For heirs, it's important to use the “newfound” money wisely. This is not the time for them to move into a mega-mansion, buy a yacht, or go on extravagant shopping sprees.

Instead, help them plan for wiser uses of the funds:

  • Eliminate debt.
  • Add to an emergency fund.
  • Save for higher education.
  • Use it to improve their home.
  • Make equity-producing investments.

One easy rule of thumb is for heirs to save 80% of their inheritance. This will help them pass along money to their own heirs.

The Bottom Line

Strong family communication is the key to a successful wealth transfer. By involving your heirs upfront, and being honest and clear about your situation, as well as your expectations, you may be able to eliminate contentious disagreements over inheritances and prepare your heirs for a successful wealth transfer.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Cerullli Associates. "The Great Wealth Transfer."

  2. BNY Mellon. "The Parent Trap: Avoiding Common Multigenerational Wealth Planning Pitfalls."

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