Wealth Transfer
The process of passing accumulated assets from one generation to the next through inheritance, gifts, trusts, or estate planning.
What is Wealth Transfer?
Wealth transfer refers to the movement of financial assets and property from one individual or generation to another, typically from parents and grandparents to children or grandchildren. It occurs through multiple channels: inheritance at death (subject to estate tax on estates exceeding the federal exemption, which was $13.61 million per individual in 2024), lifetime gifting (subject to gift tax, with an annual exclusion of $18,000 per recipient in 2024), beneficiary designations on retirement accounts and life insurance (which pass outside the probate process), and irrevocable trusts that remove assets from the taxable estate. The United States is in the midst of the largest intergenerational wealth transfer in history, with an estimated $84 trillion expected to change hands from Baby Boomers and older generations to Millennials and Gen X by 2045.
Example
A grandparent contributes $18,000 per year per grandchild (the 2024 annual gift tax exclusion) to 529 college savings plans for 5 grandchildren — $90,000 per year total, $900,000 over 10 years — completely free of gift tax. Alternatively, they can elect to front-load 5 years of contributions ($90,000 per child) in a single year using the 529 superfunding strategy, accelerating the account's compounding without affecting the lifetime gift tax exemption.
Source: IRS — Gift Tax