The great wealth transfer: What inheritors need to know

Over the next few decades, younger generations stand to inherit trillions of dollars in a massive wealth transition that's been called the great wealth transfer. If you find yourself in the position of inheritor, you may experience a life-changing financial gain alongside a difficult emotional loss.

No amount of reading or reflection truly can prepare you for the emotional side of things. However, there are ways to prepare for and manage the logistics of it all. Learn what receiving an inheritance could mean for you and how you can prepare to manage an inheritance wisely.

Many people now in their 70s, 80s and 90s have accumulated more wealth than they're likely to spend during their lifetimes. They've enjoyed successful careers, business ventures and stock market investments. And from 2025 through 2048, these members of the baby boomer and silent generations are expected to leave an estimated $124 trillion to the younger generations, according to research by Cerulli Associates.

At a societal level, this shift of funds to Gen Z, millennials and Gen X is said to be the largest wealth transfer in history. It's also going to put more women in charge of more assets than we've seen before, including homes, retirement accounts, businesses and investments.

Being on the inheritor side of the great wealth transfer can give you financial opportunities and responsibilities. Whether you were expecting the windfall or not, you'll need to assess and decide the best way to use it. 

• Opportunities. Use your inheritance to advance clear goals: pay down high‑interest debt, build an emergency fund, invest for retirement or seed a business. If giving is part of your values, consider setting aside a portion for charitable gifts or a donor‑advised fund.

• Responsibilities. Inheritance can come with responsibilities. If assets pass through a trust, learn the distribution rules and timing. Confirm beneficiary designations across accounts and insurance so they align with the will or trust, and consider how to honor the giver’s intentions.

  

  The other side of the great wealth transfer: What baby boomers should know

  Planning to distribute a lifetime of assets involves estate planning, trust choices and tax strategies. Learn why this transfer matters, how to prepare and what options can help your family.
  
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If you expect to receive an inheritance or death benefit, you can start preparing now to make the transition easier when the time comes.

1. Assess your goals. Brainstorm all the ways you might want to use your inheritance. Include possibilities for varying amounts of wealth. Your list doesn't have to only include practical things. Then prioritize the goals that would have the biggest impact.
2. Communicate. Ask the person you might inherit from how they would like you to use any assets they might leave you. If the assets will be left in a trust, learn how distributions will work. Consider also discussing how the giver intends to divide their assets among inheritors. Create an opportunity for open conversation and understanding now, and you might be able to reduce hurt feelings and conflict later.
3. Learn about tax rules. Learn key tax rules early. Most taxable investment assets receive a step‑up in basis at death, which can reduce capital gains when you sell. Most non‑spouse beneficiaries of traditional IRAs must withdraw funds within 10 years and pay income tax on distributions. Planning ahead can help reduce taxes.
4. Build your financial literacy. You'll be a better steward of any inherited wealth if you already know how to manage your cash flow and how investments work. You'll also want to understand what kind of insurance and estate planning you need to protect your current and future assets.
5. Hire a professional. If you want help from someone who knows this stuff better than you and who can help you understand your options, consider working with a financial advisor. Before hiring anyone, check out their regulatory background, credentials and experience. Then set up an introductory meeting. Evaluate at least three people to get a sense of what different advisors offer and who you feel comfortable with.

Receiving a financial windfall can be a blessing. It also can be more complicated than you might expect. Here are some of the issues inheritors run into and ways you may be able to minimize them in your own situation.

Taxes and fees can be larger than expected. Most taxable accounts and real estate get a step‑up in basis at death, which can lower capital gains, but retirement accounts do not. Many non‑spouse IRA heirs must distribute within 10 years and pay income tax. Probate may add court and attorney costs, and properties carry ongoing expenses.

If you haven't inherited wealth yet, but it may be in your future, open communication while your parents are still alive can help set expectations and prevent future disagreements. For example, if one sibling might receive a larger inheritance, hearing a parent's reasoning—"I'm leaving more to your sister because she's been working less to take care of me"—can be helpful.

It might be tempting to start implementing your vision for your rich life the second you inherit. Plus, spending the money may create a welcome distraction from grieving. However, you're likely to feel better in the long run if you take your time to create a deliberate plan for the assets you inherit.

Expecting or receiving an inheritance might reduce your motivation to work, save or invest. That's understandable. But everyone needs a sense of purpose. If the way you currently spend your time doesn't feel meaningful, consider exploring different career paths, hobbies or volunteer opportunities. Also, think about how learning to invest could help you multiply your charitable giving.

Inheriting wealth can be life-changing. Used wisely, an inheritance can create long-term security and give you more options to put your resources toward your highest values. 

Before making any moves, consider having a conversation with a Thrivent financial advisor to get a better understanding of your potential tax obligations and financial planning opportunities. And don't neglect the emotional aspects of this change: Give yourself plenty of time to process your new normal. 

When you're ready, you can start taking steps to make the most of what you've received and honor the person who gave you this gift.