Sources:
2 The two moments that matter: Financial professional strategies for the Great Wealth Transfer, Protective, 2026.
3 https://www.ltcfeds.gov/long-term-care/costs
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After you’ve spent years building wealth, determining what happens next is an important step in your financial plan. Wealth transfer planning is one way you can confidently prepare for the future and ensure your assets are passed on according to your wishes.
The Great Wealth Transfer is an ongoing transition of wealth and assets from Baby Boomers and older Americans to their spouses, adult children and charities. By 2048, it’s estimated that more than $120 trillion may change hands.1 Wealth transfer planning matters because it puts you in charge of how assets should move, instead of leaving things up to chance.
Wealth transfer planning is the steps you take to determine how and when assets transition to your spouse, heirs or charities. Common assets include cash and investments, real estate and businesses. The goal of wealth transfer planning is to clearly document and communicate how, when and to whom these assets will transfer.
Having a wealth transfer plan can help:
Many people think a plan means simply creating a will and naming beneficiaries. While there are many benefits of a will, wealth transfer planning involves a lot more strategy.
Wealth transfer planning and estate planning may sound similar, but they are two separate, necessary parts of leaving a legacy.
Estate planning is the legal foundation — wills, trusts, beneficiary designations, powers of attorney and other legal documents — that generally details the wishes of the bequestor after she or he has passed away. Wealth transfer planning is a broader strategy that can span during life and after death.
Wealth transfer research from Protective found that many critical “last step” planning documents, such as revocable trusts, powers of attorney (POA) and healthcare directives are commonly left incomplete upon the death of the bequestor.2
If you’ve been wondering, "What are the steps I can take to build a plan?" here’s a framework you can follow:
Wealth transfer planning is not a one-time event. Life and financial situations can change, making it important to revisit your plans regularly to make adjustments as needed.
Protective’s research also revealed that many individuals understand the importance of wills and beneficiaries, but fewer have made more comprehensive plans that include trusts, long-term care planning or communicating intentions with heirs.2
A comprehensive wealth transfer plan may include:
Protective research found that bequestors are most concerned about becoming cognitively impaired in later years (59%) and care costs significantly depleting their estate (55%).2
Incapacity planning and long-term care planning are core to wealth transfer readiness and a key part of the planning process. You may want to consider the following as part of incapacity planning:
Research suggests that nearly 70% of people turning 65 will require some kind of long-term care.3 Planning to designate a portion of savings or securing long-term care insurance for these needs can help make sure you aren’t caught off guard with unexpected costs.
You have several wealth transfer strategies to choose from, depending on your situation and goals. The following approaches are options to transfer assets efficiently to family, loved ones and charities.
Lifetime giving involves giving cash or assets to loved ones while you are still alive. In 2026, the annual federal estate and gift tax exemption is $15 million, and the annual gift tax exclusion is $19,000 per recipient. Lifetime gifting helps to reduce estate taxes and lets you see the benefits of providing financial support.
An Irrevocable Life Insurance Trust involves you funding a trust and a trustee using the funds to purchase a life insurance policy and pay premiums. The policy’s death benefit is paid to the trust, then distributed to beneficiaries. An ILIT helps reduce estate taxes and helps protect loved ones.
A Spousal Lifetime Access Trust (SLAT) involves funding a trust using the lifetime gift tax exemption, with a spouse or children as the beneficiary. SLAT helps to reduce estate taxes while keeping indirect access to assets for income.
A Grantor Retained Annuity Trust (GRAT) involves putting highly appreciating assets such as stocks or real estate into a trust to receive annuity payments for a fixed number of years. Beneficiaries receive remaining assets and any asset growth above the IRS-defined 7520 interest rate free from gift or estate taxes.
As you plan for wealth transfer, there are several tax considerations to keep in mind. Understanding these implications, such as the difference between inheritance and estate tax, can help make sure you’re taking the right steps to reduce tax burden for yourself and beneficiaries.
Wealth transfer can be a complicated process. It’s helpful to know common mistakes, so you can avoid them if possible when planning.
Financial professionals in Protective’s study said that fewer than half of couples are equally involved in wealth transfer planning.2 This creates a continuity risk if the more involved spouse passes away first. Equally involving both spouses ensures that each spouse’s wealth transfer goals are met and the surviving spouse has the right protection and income later.
Family dynamics were another challenge noted by financial professionals. A common miscommunication is around lifetime gifting. Sixty percent of inheritors expected lifetime transfers, while only 20% of bequestors planned to make them. Clear communication makes sure that family is aligned on expectations and responsibilities to avoid confusion or conflict.
Another way to improve family communication during wealth transfer is to connect the bequestor’s financial professional with inheritors. This can ensure plans are comprehensive and everyone remains on the same page.
A wealth transfer plan designed today might not be the best plan a few years from now. If any of the following situations happen, plans should be revisited, reviewed and updated as necessary.
A wealth transfer plan helps ensure your estate and assets are transitioned to the next generations with the greatest efficiency and organization. If you’re feeling overwhelmed about what’s involved in wealth transfer planning, you may want to seek support from a financial professional. With their guidance, you can benefit from greater tax efficiency, coordination across assets and objective guidance.
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