Could Your Parents Be Secret Millionaires?
According to the report, 52% of the 457 wealthy parents surveyed have not fully disclosed their wealth and a similar percentage say it isn't important to leave a financial inheritance to the next generation. Ouch.
With three quarters of survey respondents saying their wealth came from hard work and focus, and roughly half noting it also involved sacrificing their personal lives, relationships and health, it may come as no surprise that these survey respondents now put a higher value on concentrating on relationships and travel, than an inheritance for their children or leaving a positive impact on society.
"U.S. Trust has done similar surveys in the past, but what I think is different this time is a distinct generational mindset. You have these self-made baby-boomers and they're really changing the established notion of retirement and what it means to have an intergenerational transfer of wealth," says Keith Banks, president of private wealth management company U.S. Trust, a unit of Bank of America (BAC).
Why Some Parents Are Staying Mum on Riches
In listing reasons why they've opted to remain quiet about their wealth, roughly a third of these wealthy parents say they've never thought about it. According to the survey, another 24% were concerned that it would result in lazy children. Another 20% were afraid their kids would make poor decisions and another 20% feared they'd squander the money.
That may explain why 45% of these parents felt that their children would need to be at least 35 years old before they would possess the financial maturity to handle their inheritance. Nearly two-thirds of survey respondents lacked strong confidence that their kids could handle any inheritance that may come their way.
At some point, high-net worth parents may want to clue the kids in on the inheritance they stand to gain so that they're prepared to understand wealth management. According to U.S. Trust, 27% of surveyed parents never discussed the transfer of wealth with their adviser and a third never broached the topic of their heirs.
Additionally, 56% of survey respondents haven't recorded all of their personal property and assets and, more importantly, 51% haven't laid out instructions for distributing their personal belongings among the heirs like who gets dad's memorable Rolex watch used for timeouts or mom's beloved tea set used for parties in the playhouse.
As the survey notes, personal possessions are often the source of family heartache and conflict when settling an estate. And that stands to reason as they hold the most memories of their parents for heirs, compared to the millions that these heirs may not be aware of.