On Inheritance, UBS Urges Families to Break the Silence

UBS Investor Watch report details the lack of family discussions on inheritance plans

Nearly a quarter of grandparents in the survey plan to leave money directly to their grandchildren. Nearly a quarter of grandparents in the survey plan to leave money directly to their grandchildren.

Inheritance is not being discussed at the dinner table.

But it should be, according to UBS Wealth Management Americas’ quarterly UBS Investor Watch report, released Tuesday.

The report found that nearly half (46%) of benefactors have not discussed their inheritance plans with their children. And only 34% have revealed their wealth. More discussions lead to better and happier wealth transfers — and, as the report points out, an estimated $40 trillion of personal wealth expected to change hands by 2050 means there is a lot to talk about.

“Inheritance can be a complex and sensitive issue for both sides, parents don’t want to talk about mortality and children don’t want to appear greedy by bringing it up,” said Paula Polito, client strategy officer for UBS Wealth Management Americas, in a statement. “But the fact of the matter is that it’s a conversation that needs to be had among families. Open lines of communication and advance planning are critical to ensuring a smooth transfer of wealth and to preventing future conflict among heirs.”

When heirs know the details of the inheritance plan ahead of time, the report found that 89% were more satisfied with the inheritance process. According to the report, based on a study of more than 2,800 high-net-worth and affluent U.S. investors from June 24 through July 7, “when heirs do not know the details ahead of time they are more than twice as likely (27% vs. 12%) to disagree with family about the inheritance distribution.”

Several emotional factors are helping to deter these kinds of conversations. Nearly a third of benefactors don’t want their offspring to count on the inheritance, and 23% of heirs don’t want to appear greedy. Another common barrier facing both parties: estate planning doesn’t feel like a pressing issue, according to 43% of benefactors and 46% of heirs.

While the report found several factors keeping benefactors and heirs from talking openly about inheritance, both sides agreed it should be up to the benefactors to start the conversation and ease the barriers.

Giving While Living

The wealth transfer process and inheritance planning has become much more than just writing a will, including plans for giving while living, managing taxes and multigenerational giving, the report found.

Four out of five benefactors have provided financial support to their adult children for a wide variety of reasons, including financial need (51%) and a desire to see their children succeed (47%).

The number one way parents offer financial support to their adult children, the report found, is by putting money into college funds for their grandchildren. Nearly a quarter of benefactors with grandchildren plan to leave part of their inheritance directly to their grandchildren, and for 43% of those benefactors, it's highly important that their assets last and are also able to support their grandchildren.

Longer lives and end-of-life health care add a layer of complexity to discussions of inheritance planning

“Benefactors must determine how much financial support they can provide to their heirs while facing an uncertain lifespan, while considering the impact of health care costs on savings,” the report stated. “This uncertainty about longevity and potentially outliving one's assets acts as a barrier to inheritance discussions.”

The report found that “a significant portion of investors are highly concerned about being able to afford long-term care (23%, the highest of all personal finance concerns) and outliving their assets (13%).”

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