Investors are unprepared for the largest wealth transfer ever

UBS Investor Watch: Around forty percent of high-net-worth investors do not have an up-to-date will or wealth transfer plan.

Over the next 20 years, the world will experience the greatest transfer of  wealth in history with $84 trillion expected to pass down to younger generations in the US alone. UBS’s latest  Investor Watch report, which surveyed 4,500 investors in 14 markets with at least $1 million in investable  assets, found that around 40% of investors globally have not formalized an inheritance plan, due to the  complexity of dividing their inheritance fairly. Fifty percent of investors surveyed have not shared where assets  are held, how they intend to divide them, or how much they are worth. 

Navigating a wealth transfer can be a complicated and emotional issue. Two-thirds of investors struggle with  how to share their wealth in a way they consider fair, particularly if it means dividing assets unequally among  heirs. Investors who chose to favor some of their heirs over others are clear about why, with 80% giving  more to heirs they have closer relationships with. Others cite what their heirs’ financial needs are and how  much responsibility they have in taking care of their benefactor as they age. 

“While investors overwhelmingly want the inheritance process to go smoothly, inadequate inheritance  planning can be costly and could lead to unresolved family conflict,” said Iqbal Khan, President Global Wealth  Management and President Europe, Middle East, and Africa at UBS. “Every family has different values and  should be supported by a team of professionals who can help them develop a personalized strategy to  preserve what is most important to them,” said Heinrich Baer, Country Head of UBS in Luxembourg. 

For heirs, having conversations about wealth is also difficult but discussing inheritance plans too late may  create challenges: 

  • A third admit to having unresolved issues and conflicts with other heirs.  
  • Nearly half said one of the biggest barriers to open communication was the fear of appearing selfish.
  • Among investors who have received an inheritance, four in 10 wish they had been more open with their  parents beforehand. 
  • For those who served as executors, 64% said carrying out their parents or relatives last wishes was  difficult. 

Different family dynamics can complicate inheritance plans. Families that include stepchildren face even  greater struggles dividing assets. Eighty-seven percent of blended families struggle with dividing assets fairly, compared to 62% of non-blended families. Investors without children are more likely to leave a higher  proportion of their wealth to charitable causes (40%), compared to investors with children (30%).  

Business owners face additional complications when addressing the wealth transfer—particularly since the  business is often the most valuable asset and difficult to pass on. Six in 10 business owners struggle to divide  assets fairly. Around half (47%) hope to leave their business to family, but many have no estate plan and  have not discussed their intentions with heirs or set expectations about business transition plans. 

The majority of investors and heirs agree that the best form of action is ongoing and purposeful  communication, and around half of all investors surveyed expressed interest in including a professional to  help facilitate wealth transfer discussions. 

Regional Findings for Western Europe:  

Around three-quarters of investors in Western Europe and 80% of investors in the UK and France find it  challenging to divide assets fairly, compared to the global average of 66%.  

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Source: UBS