The great wealth transfer is in
motion, and women may emerge as the biggest beneficiaries. Women are poised to
inherit in the forthcoming decades a sizable share from their spouses and aging
parents. Despite the persistent gender average worldwide pay gap (women still
only earn approximately 80% of what their male counterparts do), women are going
to accumulate wealth and they need assistance in preparing for that wealth
transfer. Here are first the countries with the largest wealth transfer in the
coming 30 years. How much of it is going to be lost to taxes and how inheriting
women are dealing with what is expected to fall in their hands?
High Net Worth Individuals
According to the Wealth-X High
Net Worth Handbook 2019, published in January 2019, the number of individuals
with net assets of $1m – <$30m totaled 22.4 million in 2018. These are
defined as High Net Worth (HNW) individuals. Their combined net is worth $61.3trn.
New York is home to the most
HNW Individuals – while New York City saw its HNW population shrink by 0.6% in
2018, with just below a million HNW individuals, the Big Apple still retains
with a HNW population that is 65% larger than the second city in the top 10, Tokyo. In addition, six of the top 10 cities are in
The Asia-Pacific region is projected
to experience the strongest growth in the number of HNW individuals and
combined wealth, with the region’s HNW population projected to increase at a
compound annual growth rate of 7.6% over the next five years.
Ultra-High Net Worth Individuals
On the ultra-upper stratum,
individuals with assets of at least US$30 million are defined as Ultra High Net
Worth (UHNW). Half of the world’s UHNW are expected to pass on their wealth in the
coming three decades. Over the next 10 years alone, US$4.1 trillion is
anticipated to change hands.
Comparing HNW and UHNW
populations shows an even larger proportion of self-made HNW individuals –
almost nine of every ten.
The HNW population exhibits a
more equitable gender split than the UHNW population but nonetheless remains
heavily male dominated.
Ultra High Net Worth Wealth Transfer
At least US$16 trillion of
global UHNW wealth will be transferred to spouses and their children over the
next 30 years — marking the largest wealth transfer in history.
The US is the country with the
largest amount of UHNW wealth. In absolute dollar value, over US$6 trillion is expected
to be transferred in the next 30 years. This is equal to 38 percent of the
global total of US$16 trillion.
Rounding out the rest of the
top five "hot spot” countries for wealth transfers in absolute dollar value are
Germany (US$1.645 trillion), Japan (US$1.645 trillion), the United Kingdom
(US$830 billion) and Brazil (US$560 billion).
The five countries with the
largest proportion of UHNW wealth being transferred over the next 30 years are
Malaysia (US$85 billion), Taiwan (US$170 billion), France (US$415 billion),
Japan (US$1.645 trillion) and Brazil (US$560 billion), according to Wealth-X
forecasting. UHNW individuals in Malaysia, Taiwan and Japan are all expected to
hand over at least seventy percent of their wealth to the next generation; this
is partly because some of the wealthiest billionaires in these Asian nations
are already in their 70s or 80s, which has a disproportionate impact on each
country as a whole.
Across regions, North America
is predicted to be the source of the largest transfer of UHNW wealth over the
coming three decades, in both absolute (US$6.35 trillion) and relative terms
(62 percent of total wealth). Africa and Asia are set to have the lowest
proportion of their current UHNW wealth change hands in the same 30-year
period, at 43 percent. Europe will have a smaller wealth transfer than North
America in both absolute and relative terms, because Europe already has a
higher proportion of inherited wealth; 45 percent of Europe’s UHNW individuals
have fully or partially inherited their wealth, compared to only 25 percent in
In the following 20 years,
Asia’s UHNW population and wealth are anticipated to grow to become the largest
in the world. Whilst Wealth-X expects Asia to be at the center of wealth
creation in the coming decades, it will still take a long time for the impact
of this to affect wealth transfers to the next generation in the region.
In the Middle East, including
Turkey, over the next 10 years alone, US$130 billion is anticipated to change
hands, over the next 20 years another US$220 bn, and over the next 30 years
some US$490 bn is anticipated to change hands.
Problems of the Rich
Without prior planning, UHNW
individuals could lose up to half of their fortunes through inheritance taxes.
All of the five "hot spot” countries have an inheritance tax rate of at least
40 percent, with the exception of Brazil, where the maximum rate is 8 percent.
The relatively high tax rates underscore the importance of early planning to
ensure the successful transmission of assets and values from the benefactor to
his or her beneficiaries.
Since most of the beneficiaries
are going to be women – spouses or daughters, a recent study by RBC Wealth
Management looks at how high-net-worth women — future key decision makers in
managing family finances — approach building and preserving wealth. It looks as
they will be needing assistance in preserving and further transferring wealth.
The study comprised 1,752 women
and 1,321 men across the U.S., Canada and the U.K. worth $4.4 million each on
average. Even though it reflects native English-speaking countries, I would
assume that UHNW individuals have traveled heavily and are influenced by the English-speaking
cultures. Thus, the following tendencies probably apply to non-native UHNW
English individuals too.
Women as beneficiaries
Fifty-seven percent of women in
the survey had received a transfer of wealth, and most of the others expected one
in the future.
The inheritance experience, RBC
found, was "often lonely and confusing” because inheritors, regardless of
gender, were "generally unprepared, uninformed and unsupported.”
Earlier research showed that
many rich families transfer wealth absent context, conversation, guidance or
accountability. A big majority of inheritors in the RBC poll who reported
having advance conversations with their benefactors knew in advance the
monetary value of the assets they would receive. However, they had little
understanding of what the benefactors wanted them to do with the assets or of the
structures used to transfer assets or the advisors who would facilitate the
Women in the survey were less
likely than men to receive information about their inheritance. Thirty six percent
of female inheritors said they had received no professional or family guidance
at all. Moreover, just 29% of women had benefactor guidance about how to use
the assets, compared with 37% of men. Yet, 19% of women who expected to receive
an inheritance said this was an important part of their preparation, and 21%
said some investment education would be the most valuable type of guidance.
Other research has found that
in American families, talking about money matters is often difficult. Upon
receiving their inheritance, women had to figure out how to incorporate the
assets into their overall wealth and retirement planning.
Fifty-seven percent of women said
they intended to pass on their wealth only upon death or illness. The reason: For
27% of these, it was a sense of not having enough to give away gradually while
living, and 31% said they need the money to fund their lifestyle.
The report found that worries
about having enough money for retirement was holding back some women from initiating
wealth transfer plans.
Twenty-two percent of those
surveyed said they had a full wealth transfer plan in place, compared with 30%
of men, and more than a third of women said they had yet to do any preparation.
A study by Boston College
researchers found that inheritances do not improve retirement security much.
Preparing the Next Generation
Many female inheritors are
drawing on their own experiences in constructing a strategy for the next generation,
according to RBC.
Ninety-two percent of respondents
reported that they had begun to educate their children on wealth matters or
intended to do so. They said children should start to learn how to manage
family wealth at these ages: Budgeting at age 17, Investing at age 20 and wealth
transfer at 24.
RBC said its research showed
that women who are knowledgeable about wealth and focused on their family’s
long-term financial health are both empowered and empowering. The study found
that not all high-net-worth parents were convinced that a proactive approach to
educating their children was working. Only 44% expressed confidence in their
heirs’ abilities to grow their wealth. However, the next generation had a different
view. Both female and male millennials appeared to be growing in confidence and
financial sophistication, the study found.
Younger women, in particular,
were benefiting from their mothers’ efforts, the research showed, with 51%
exhibiting confidence in their wealth knowledge.
In summary, if you are a female
who is expecting to inherit a large inheritance, don’t wait. Go look for
someone to educate you in finances if your future benefactor is not doing so.