We recently wrote about some of the unique challenges baby boomers tend to face when they inherit from their parents. The parents of baby boomers tend to be thrifty, exacting with their finances and tend to be dedicated to charitable giving. When baby boomers inherit, they often have some understanding of how hard their parents worked to accumulate their assets and therefore feel a great sense of pressure to do something truly “worthy” with their inheritance.
But what about the children of baby boomers? This generation is also set to inherit a great amount of income and assets through the wills and trusts set up by their baby boomer parents and loved ones. Many are predicting that the children of baby boomers will benefit from a so-called inheritance boom. However, other experts predict that the wealth disparity currently defining the American economy will greatly impact the inheritance trends which will affect the children of baby boomers specifically.
One New York University economist recently explained to The New York Times that, “People have been talking about an inheritance boom for a long time, and so far it has not really materialized. There are all these offsetting effects that mitigate the influence of inheritances on wealth inequality.”
In addition to sometimes sizeable inheritance taxes, the baby boomer generation’s pressure to honor their parents’ sacrifices has led many of them to give away substantial fractions of accumulated wealth and assets that would traditionally pass to heirs. It seems that inheritance trends are pointing to a greater distribution of accumulated wealth as opposed to a greater concentration of it.
Source: New York Times, “What Comes After Rich Baby Boomers? Kids With a Big Inheritance,” Annie Lowrey, March 11, 2014