Younger high-net-worth Americans are more likely to prefer living wealth transfers, says Schwab

While wealthy individuals usually wait until after death to leave their financial legacy, a large number of high-net-worth Americans are breaking away from that mode – and younger generations are leading the charge.

A new survey from Schwab, which drew responses from more than 1,000 individuals with at least $1 million in investable assets, found that Millennials and Gen Xers are more inclined to transfer their wealth while still alive, while Baby Boomers prefer to pass it on later.

A 97 percent majority of wealthy respondents said they plan to transfer their assets to the next generation. Of these, 36 percent favor giving during their lifetime so they can see the impact of their wealth, while 39 percent prefer leaving it to heirs after they pass away. Members of Gen X and Gen Y were more than twice as likely as Boomers to prioritize lifetime giving, indicating they'll share more than twice as much of their wealth while alive.

"[As multi-millionaires] move from building wealth to preserving and passing it, we see an increasing need for specialized services and support around estate planning, wealth transfer, and legacy planning," Andrew D’Anna, managing director of retail client experience at Charles Schwab, said in a statement. “According to our survey, younger Americans could be poised to reshape legacy planning and the future of how wealth is passed to the next generation.”

Most wealthy individuals plan to take a balanced approach, transferring about 40 percent of their assets during their lifetime while leaving the rest for later. Among the 61 percent of respondents who plan to pass at least some of their wealth while alive, 46 percent identified a desire to give financial support, while 36 percent said they want to build memories with their beneficiaries.

On average, the respondents said they plan to pass on $4.1 million, with real estate making up the lion's share of their largesse (40 percent). That was followed by investments (31 percent), cash (18 percent), and life insurance payouts (11 percent). Ultra-high-net-worth respondents with over $10 million in investable assets expect to leave significantly larger amounts, $11.9 million on average though 23 percent worry about giving too much and the possible impact on heirs.

For affluent households, transferring wealth shouldn't be just about setting the next in line up for a good financial future; it's also about making sure they're prepared to carry on a larger vision, emphasized Susan Hirshman, director of wealth management for Schwab Wealth Advisory.

“We encourage families to ground discussions and planning around shared values and goals for wealth being transferred," Hirshman said. "These conversations can help heirs see themselves as wealth stewards, rather than just beneficiaries.”

The survey also highlights the importance of early planning, with 63 percent of respondents saying they started their wealth transfer strategies before age 45. Most have checked off crucial items from their lists, including communicating their plans with their spouses (92 percent) or children (78 percent) and drafting essential documents such as wills (57 percent) and trusts (34 percent).