The Great Wealth Transfer: What An $84 Trillion Shift Between Generations Means For Your Estate Plan

We are in the midst of one of the largest intergenerational transfers of wealth in U.S. history. Over the next two decades, substantial amounts of real estate, investments, businesses, retirement accounts, and other assets are expected to pass during the life and at death from the Silent Generation and Baby Boomers to Generation X, Millennials, Generation Z, and charitable beneficiaries. While the precise amount is impossible to determine, estimates suggest that U.S. Baby Boomers alone may transfer approximately $84.4 trillion to $90 trillion.

In addition to the sheer volume of wealth, the complexity of transferring that wealth as part of a comprehensive estate plan changes over time. New tax laws, evolving family circumstances, different financial needs among beneficiaries, and the growth of illiquid assets are some factors that can make an estate plan drafted years ago less effective than its donor intended. Without thoughtful, updated planning, families may face unnecessary taxes, administrative complications, or legal disputes at the time of the Donor’s death that could otherwise have been avoided.

What is referred to as “The Great Wealth Transfer” is, therefore, an important reminder that an estate plan should not be treated as a set of documents that are signed once and then left in a safe-deposit box. An estate plan should evolve as family circumstances, assets, and planning objectives change over time.

A Changing Tax Landscape

Tax planning is one important reason to undertake or revise an estate plan.

The vertical transfer of wealth from parents to children, or to others in the next generation when there are no children, is an obvious element of the Great Wealth Transfer, but for married couples, wealth frequently moves horizontally first, from one spouse directly or for the benefit of the other spouse. A carefully structured estate plan can provide financial security for the surviving spouse while also taking advantage of available tax provisions to preserve assets for the next generation.

Effective tax planning can result in significant savings to the greater family. At the state level, every eligible Massachusetts estate should utilize the available $2 Million estate tax exemption amount (raised from $1 Million in 2023).

Federally, legislation enacted in 2025 permanently increased the estate tax exemption amount to $15 million per individual, including taxable gifts made during life combined with the value of estates of decedents dying on or after January 1, 2026. This increased exemption creates new opportunities for lifetime gifting and other strategies designed to reduce the value of a taxable estate.

Protecting a Surviving Spouse While Preserving an Inheritance

When reviewing an estate plan, spouses may want to consider a specialized trust, called a Qualified Terminable Interest Property trust, or QTIP trust, where income of the trust is paid to the surviving spouse and the principal or assets of the trust are available for the spouse’s support. This arrangement can permit a spouse to live comfortably in the lifestyle to which they are accustomed, while preserving assets for the next generation.

This type of trust can be particularly beneficial for blended families as it recognizes two legitimate objectives simultaneously: protecting the surviving spouse and preserving an inheritance for the descendants of the deceased spouse.

Planning for Different Beneficiaries

As family circumstances change, an estate plan should be reviewed to provide flexibility in addressing the varying needs of different beneficiaries. One beneficiary may want to preserve an inheritance as a long-term investment. Another may want to use inherited funds to eliminate student debt, purchase a first home, start a business, or provide financial support to a young family. In addition, a beneficiary may have developed a disability or have financial concerns due to a divorce or a failed business.

Estate planning can accommodate these differences. Trusts can provide beneficiaries with flexibility while also protecting assets from certain risks. Depending on the terms of the trust, trustees may have discretion to make distributions for education, housing, health, or other needs rather than requiring an inheritance to be distributed outright.

Retirement Accounts Require Special Attention

Retirement accounts are another reason to take a fresh look at an estate plan.

The SECURE Act and subsequent IRS guidance changed the rules governing inherited retirement accounts, particularly for non-spouse beneficiaries. Gone is the stretch IRA for non-spousal beneficiaries. Now, most adult children who inherit a qualified retirement account such as an IRA are subject to a ten-year distribution period, with certain eligible beneficiaries qualifying for different treatment.

These new rules can result in significant income tax liability for the beneficiary over the withdrawal period. Careful planning on how and when to withdraw benefits is, therefore, recommended. Depending on the beneficiary’s income tax bracket, applicable tax rates, investment performance, charitable intentions, and other circumstances, a carefully considered distribution strategy may produce a better tax result.

In addition to qualified retirement assets such as IRAs and 401Ks, it is important to periodically review and update all assets that require the completion of a beneficiary designation form such as, life insurance and annuities, as beneficiary designations control regardless of what a will or trust provides.

Real Estate and Other Illiquid Assets

Much of the Great Wealth Transfer will occur in the form of important illiquid assets such as real estate and closely held businesses. These assets often require specialized planning as they are not easily divided and may create a significant tax liability.

Consider three siblings who inherit a Cape Cod vacation home worth $2 million. One sibling wants to sell it, another wants to use it every summer, and the third wants to rent it to generate income. If the estate plan simply leaves the property equally to all three children, it may create economic equality while simultaneously creating a recipe for family conflict.

A more thoughtful plan could establish rules in advance concerning use of the property, payment of expenses, scheduling, repairs, rental income, valuation, buyouts, and eventual sale. Alternatively, the estate could provide other assets to one or more beneficiaries so that the vacation property can pass to the child who actually wants it.

Massachusetts families have a variety of tools available to address these issues, depending on the nature of the property and the family’s objectives. A revocable or nominee realty trust may allow real estate to pass outside of probate and provide continuity of management. An LLC may be appropriate for certain investment or commercial properties. Carefully drafted co-ownership arrangements can establish procedures for maintenance, use, expenses, transfers, buyouts, and disputes.

A family that inherits a valuable property may discover that insurance, maintenance, taxes, and capital improvements make ownership substantially more expensive than anticipated.

A property that appears to represent a $2 million inheritance on paper may impose substantial annual obligations on the person receiving it. The estate plan should therefore answer not only, “Who gets the property?” but also, “Can the person receiving it realistically afford and manage it?”

Business Succession Requires Advance Planning

Business succession can present an even more complicated challenge. A closely held business may represent a family’s largest asset, yet its value may depend heavily on the continued involvement of particular individuals.

An effective succession plan should address what happens if the owner dies, becomes incapacitated, retires, or wants to transfer ownership during life. Trusts, lifetime gifts, insurance, recapitalization, and buy/sell agreements are just some of the techniques that may be considered depending on the business and the owner’s objectives.

The key is to begin the conversation before a crisis forces the family to make decisions under pressure.

Protecting Your Wealth

There is another side of the Great Wealth Transfer that receives considerably less attention than the interests of beneficiaries: the wealth may have to last longer than expected.

As life expectancies increase, a person who originally planned to leave substantial assets to the next generation may ultimately need a significant portion of that wealth for personal care. Assisted living, memory care, home health care, and skilled nursing can be extraordinarily expensive, particularly when care is required for years rather than months.

This creates an important intersection between estate planning and elder law. The objective should never be to maximize an inheritance at the expense of your financial security.

A family may have carefully structured an estate plan to minimize taxes, only to discover years later that the plan did not adequately address incapacity or long-term care needs. An effective plan must protect you first.

Reducing the Risk of Family Conflict

As substantial wealth changes hands, disputes among beneficiaries can become increasingly consequential. Litigation may involve allegations that a parent lacked capacity, that someone exercised undue influence, that a beneficiary was improperly excluded, or that an executor or trustee breached fiduciary duties.

No estate plan can guarantee that a family member will never litigate the legitimacy of the plan. Careful drafting and thoughtful planning, however, can reduce ambiguity and make the client’s intentions easier to establish. Clear dispositive provisions are important. So is selecting appropriate fiduciaries. In some families, a professional trustee or independent fiduciary may be preferable to placing one sibling in control of assets that will ultimately be divided among several siblings. Clear documentation can also be valuable when a client’s plan departs significantly from what family members might expect.

Any reason for an unexpected division of property at death should be documented to avoid confusion and allegations of undue influence. Suppose a parent has provided substantial financial assistance to one child during the parent’s lifetime but intends to leave the remaining estate disproportionately to another child. If the parent has capacity and is making that decision voluntarily, documenting the reasoning can help demonstrate that the unequal distribution was intentional rather than the result of confusion or undue influence. In addition, if capacity may be a concern, contemporaneous evidence such as evidence of a medical exam could be kept with the estate planning documents.

Family Changes Are a Reason to Review an Estate Plan

Changes to family circumstances may be the most important reason to revisit and estate plan.

A marriage, divorce, remarriage, birth of a grandchild, death or incapacity of a beneficiary, change in a child’s financial circumstances, move to another state, purchase or sale of significant real estate, creation or sale of a business, or substantial change in retirement or investment assets can all warrant a comprehensive review.

Blended families deserve particular attention. A person who remarries after having children from a prior marriage may have very different objectives from a person in a first marriage. An old plan that simply leaves everything to the surviving spouse may not accomplish the client’s current goals.

The passage of time itself can also be a trigger. An estate plan written fifteen or twenty years ago may have been carefully designed when the client’s children were minors, when the family owned a different home, when retirement accounts were smaller, and when digital assets were barely part of everyday financial life.

An Estate Plan Should Address the Entire Financial Picture

The most effective estate plan review should look at the entire financial and family picture.

It should consider who should inherit, how a surviving spouse should be protected, whether children and grandchildren should receive assets outright or in trust, whether retirement account beneficiary designations are coordinated with the overall plan, and whether real estate and business interests can be transferred without creating unnecessary conflict. The review should also address income-tax considerations, including the treatment of inherited retirement.

For many families, the most important question is whether the estate plan written ten, fifteen, or twenty years ago still reflects today’s goals and objectives.

Conclusion

The Great Wealth Transfer is more than just a tax event. Thoughtful planning is necessary to reduce income and estate tax exposure while assuring that the transfer of homes, businesses, retirement accounts, and investment portfolios will happen efficiently and in keeping with the donor’s intent.

Estate Planning is important and individual. Your estate plan should reflect the unique goals of you and your family.

For members of the Silent Generation and Baby Boomers revisiting or beginning their estate planning process in 2026, the objective should be straightforward:

1. Preserve wealth,
2. Protect the people who created it, and
3. Transfer that wealth in a manner that reflects the family’s intentions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.