The great wealth transfer is underway — here’s how to prepare

The great wealth transfer is underway — and families need to prepare, according to certified financial planner Stacy Francis, president and CEO of Francis Financial in New York City.

An estimated $84 trillion of wealth will change hands by 2045, with the majority going to Gen X and millennial heirs, according to Cerulli Associates. 

“The real reality is that most families are not talking about money,” said Francis, speaking at CNBC’s Your Money event on Thursday. 

Some Americans don’t want to pay an attorney to draft key estate planning documents that dictate their wishes, like a will, trusts or a health-care proxy, experts say.

But a proper estate plan can “make or break the financial values that you want to impart to your children,” Francis said.

“Online tools are great, but they don’t take the place of a very smart advisor to help you do this planning,” she said.

You should also update beneficiary designations on all financial accounts, which outlines where those assets go upon death, Francis said.

Enacted by former President Donald Trump, the Tax Cuts and Jobs Act, or TCJA, significantly increased the lifetime estate and gift tax exemption, which applies to tax-free wealth transfers during life and at death.

Starting in 2025, the exemption will rise to $13.99 million for individuals and $27.98 million for married couples filing jointly, the IRS announced this week.  

But these thresholds could fall significantly after 2025 unless Congress extends the TCJA provision.  

“It’s an incredibly high exemption that we have now,” and clients frequently ask about the expirations, said Samantha Pahlow, wealth management chair of Ferguson Wellman Capital Management in Portland, Oregon. The firm ranked No. 10 on CNBC’s 2024 Financial Advisor 100 list.

Some advisors are preparing. But it’s difficult to predict the future of the exemption with uncertain control of Congress and the White House.