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UBS Investor Watch Report Breaks The Awkward Silence Around Inheritance. (Graphic: Business Wire)

Stocks in this article: UBS

UBS Wealth Management Americas (WMA) today released its quarterly UBS Investor Watch report, exploring the issues around inheritance and why families avoid the topic. The survey of over 2,800 high net worth (HNW) and affluent U.S. investors found that while both benefactors 1 and heirs 2 are optimistic about giving and receiving inheritance, neither is actively engaged in inheritance planning and are reluctant to fully discuss this topic before a death in the family occurs. As a result, almost half (46%) of benefactors have not discussed their inheritance plans with their children. With an estimated $40 trillion of personal wealth expected to change hands by 2050 3, there is a lot at stake and a lot to talk about.

Top barriers to the inheritance conversation

With benefactors not wanting to divulge their wealth and heirs being afraid or unwilling to raise the topic, the inheritance conversation is one of the most important family discussions that does not take place. For those leaving an inheritance, their top three barriers to discussion are:

  • It doesn't feel like a pressing issue (43%),
  • They don’t want their offspring to count on the inheritance (32%), and
  • They don’t want their children to feel entitled to wealth (27%).

Three in four benefactors also view it as highly important that their children use their inheritance wisely and don’t squander it.

For those on the receiving end of a potential inheritance, their top barriers are:

  • Their families don’t talk openly about financial issues (46%),
  • It does not feel like a pressing issue (31%), and
  • They do not want to appear greedy (23%).

UBS Investor Watch found that even though wealthier benefactors have planned more around inheritance they are no more likely than less affluent investors to have discussed these plans with their future heirs. They are more likely to have an up-to-date will and to have put a wealth transfer plan in place, but they are still not talking about the plans with their heirs. Therefore their heirs are no more likely to know the details of the inheritance plans and are left unprepared when a parents pass. Even with more wealth at stake, emotional barriers hold back open discussions between benefactors and their heirs.

"Inheritance can be a complex and sensitive issue for both sides, parents don’t want to talk about mortality and children don’t want to appear greedy by bringing it up," said Paula Polito, Client Strategy Officer, UBS Wealth Management Americas. "But the fact of the matter is that it’s a conversation that needs to be had among families. Open lines of communication and advance planning are critical to ensuring a smooth transfer of wealth and to preventing future conflict among heirs."

Embracing the conversation

While it may not be an easy conversation to have, talking openly about inheritance planning has a tremendous impact on heirs’ satisfaction with the wealth transfer process and lowers the likelihood of disagreements among surviving family members.

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