More than two-thirds (67%) of investors believe in passing generational wealth on to their heirs, but by far, it is millennials who are more in favor of doing so, according to a survey by Ameriprise.
The survey found that 82% of millennials compared to 59% of baby boomers and 70% of Gen X said it is important to them to leave wealth for their heirs.
The study, which included 3,325 Americans between the ages of 30 and 70 with at least $100,000 in investable assets, found that more than three-fourths of respondents said they have taken at least one step to build generational wealth. Those steps include saving strategically (42%), investing in stocks (52%), investing in real estate (27%) and building a business to pass down to heirs (10%).
Millennials (42%) were more likely to invest in real estate to create generational wealth compared with 27% of Gen Xers and 20% of boomers. They also were ahead of Gen X (11%) and boomers (3%) in indicating that they were actively building a business to pass down to heirs.
Despite their intention to pass on real estate, two in five investors find it challenging to discuss their plan it with heirs, and only 44% said they have spoken to their heirs about it. Boomers (49%) are more likely to have that discussion with their heirs, followed by millennials (41%) ad Gen Xers ((39%).
The top concerns that investors have about passing along their real estate are that heirs will not be able to afford the upkeep and taxes on it (15%), that it will go to multiple heirs and cause conflicts (14%), and that they will sell it quickly (13%).
Investors believe passing on financial values to the next generation of family members is more important, with millennials most likely (87%) to agree; Gen X followed with 82% and boomers were at 74%.
The study also showed that 67% of parents talk with their children and stepchildren about how their values shape their financial decisions, with millennials at 76% and boomers at 59%. Of the 77% of parents who indicated that they take the time to help their children/stepchildren understand the reasons behind their financial decisions, millennials again were in front at 83%. Boomers were least likely to do so at 71%.
In terms of legacy, investors said personal values and memories are more important than financial assets. They ranked personal values (37%) as most important, followed by memories of experience shared with family (35%), financial assets (21%) and personal items with sentimental or monetary value (7%).
The study also found that investors are guarded when it comes to discussing finances and estate planning with their relatives. One-third said it’s none of their business, 32% said they have shared some but do not feel the need to be completely transparent, 18% said they do not want to deal with conflicts that might arise, and 16% said they do not want any input.
Marcy Keckler, Ameriprise vice president for financial advice strategy and marketing, pointed out that investors are more comfortable discussing their values as it relates to money than they are about the specifics of their estates. “Instead of thinking of it as an ‘either/or’, we encourage people to use their values as a starting point in the conversation. This will make it easier to have an ongoing dialog and determine their comfort level with sharing more information as they make decisions and solidify their estate plans,” she said in a statement.