What is the Great Wealth Transfer?
The Great Wealth Transfer describes how wealth built up by one generation passes to the next, across society as a whole. For any one family, though, it rarely happens in a single moment. It tends to unfold gradually, through decisions and conversations that can stretch over many years.
Wealth may be passed through inheritance when someone dies. It may also move during a person's lifetime. This might include help buying a first home, support with education costs, or a gradual handover of ownership and decision-making. Some families use a mix of approaches, and the balance may shift as circumstances change.
The wealth involved can take many forms, including:
- The family home or other property
- Investment portfolios and savings
- Pension wealth
- A private or family business
- Interests in a trust or estate
- Assets held in more than one country
Each of these can carry its own responsibilities, which is why it helps to see the Great Wealth Transfer as a transfer of responsibility as well as value.
Why is the Great Wealth Transfer attracting attention in the UK?
The Great Wealth Transfer is attracting attention in the UK because a large share of household wealth is held in property and pensions, and because the population is ageing. Together, these factors suggest that significant wealth may pass between generations in the coming decades, although the amounts and timing are uncertain.
The Office for National Statistics (ONS) measures household wealth in Great Britain through its Wealth and Assets Survey. Its estimates for April 2020 to March 2022 show that net property wealth and private pension wealth were the two largest components of total household wealth, ahead of financial wealth, such as savings and investments, and physical wealth, such as vehicles, valuables, and household contents. These figures describe wealth held today. They don't show how much will be inherited, because some wealth will be spent on living costs and care, some will be passed on during life, and some will go to charities or other beneficiaries. The ONS has since suspended the survey's official accreditation while it works to improve data quality, so the figures are best read as a broad guide.
Demographic change also plays a part. ONS population projections suggest the number of people in the oldest age groups will grow considerably over the coming decades.
Estimates of future wealth transfers are projections, sensitive to property prices, markets, longevity, care costs, and family choices. For most families, a more useful starting point is a simpler question: what might pass within our family, and are the people involved ready for it?
Why is the Great Wealth Transfer about more than money?
Wealth rarely arrives on its own. It often comes with decisions attached. Should the family home be kept or sold? Who looks after the investments? What happens if the people inheriting want different things? Being left something valuable and feeling ready to manage it aren't the same thing.
Some people may also be named as executors or trustees, which means taking on duties towards others.
There's often an emotional side, too. A family home, a business built over decades, or land held for generations may mean far more than its financial value. Questions can arise where an asset is valuable but difficult to divide, costly to maintain, or important to some family members and less so to others.
A few distinctions can help:
- Ownership versus responsibility. Owning an asset isn’t the same as being ready to manage it.
- Equality versus fairness. Equal shares may not always feel fair, and a fair outcome may not always be equal.
- Financial value versus emotional significance. The asset worth most on paper may not be the one that matters most.
- Receiving wealth versus stewarding wealth. Stewardship means looking after wealth with a longer view.
Purpose matters too. Some wealth holders want to support future generations, others want to support causes they care about, and not every family wants wealth to stay within the family. Understanding what the wealth is for can make later decisions easier.
Is the next generation ready?
There's no single test of whether the next generation is ready. Readiness isn't about reaching a certain age or being good with numbers. It's about whether the people who'll inherit understand what might come their way, feel able to ask good questions, and know when to get help. It also builds up gradually, so two people in the same family can be at very different points.
What readiness can mean
Beneficiary readiness can include:
- Financial confidence. Being comfortable with ideas such as risk, return, time horizons, and the difference between income and capital.
- Readiness for ownership. Understanding what owning a particular asset involves, including its costs and obligations. For example, two siblings could inherit a holiday property. One might want to keep it for future family use, while the other would prefer to sell it and invest the proceeds elsewhere.
- Readiness for decisions. Being able to weigh up options, consider other people's interests, and make choices with long-term effects.
- Stewardship. Seeing wealth as something to look after, not only something to use.
- Awareness of future roles. Knowing whether you may become a beneficiary, trustee, executor, owner, or decision-maker.
- Knowing when to ask for help. Recognising where your own confidence ends and specialist expertise is needed.
Why age is not enough
Someone due to inherit might be in their fifties and have had little involvement in family finances, while a younger relative already feels confident and engaged. Readiness depends on experience, interest, information, and opportunity.
Different people, different roles
The person or people receiving your wealth aren't always your children. They might be grandchildren, partners, siblings, nieces and nephews, or others. One person might receive assets, another might act as executor, and another might take on a trustee role or lead a family business. Each role may call for a different kind of preparation.
Willingness matters as much as ability
A family may need to consider what happens if the next generation is unwilling rather than unprepared. Someone may be very capable but not want a particular responsibility. Recognising this early can give everyone more options.
Readiness can be built over time
Readiness doesn't have to be all-or-nothing. The next generation can build confidence through gradual involvement, for example by joining some conversations, learning how certain assets work, or taking on smaller responsibilities before larger ones.
The current generation comes first
Looking after the next generation shouldn't mean leaving yourself short. Before deciding how much to pass on, it's worth being confident that your own income, lifestyle, and any future care needs are covered.
Preparing the people and preparing the plan
Preparing for the Great Wealth Transfer involves two related questions: are the people prepared, and are the arrangements? Well-prepared people can be let down by outdated arrangements, and well-designed arrangements can be let down by people who aren't ready for them.
A simple way to hold these ideas together is: Prepare the people. Prepare the plan.
- Prepare the people is about family readiness: communication, understanding, expectations, confidence, and the roles each person may play.
- Prepare the plan is about financial readiness: making sure practical arrangements reflect current intentions and protect the security of everyone involved.Where arrangements are complex, a third idea may help: connect the expertise, so that the professionals involved are working from the same understanding of the family's intentions.
For a more detailed look at putting this into practice, read Passing wealth to the next generation: preparing your family and your finances.
Family readiness and financial readiness
Family readiness asks whether the people are prepared. Financial readiness asks whether the arrangements are prepared. Successful wealth transfer considers both questions together.
Family readiness: are the people prepared?
|
Financial readiness: are the arrangements prepared?
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| Open communication about purpose and intentions |
A clear picture of assets and liabilities |
| Awareness of what may pass and when |
Security for the current generation |
| Shared understanding of broad expectations |
Ownership that reflects current intentions |
| A sense of stewardship |
Beneficiary arrangements that are up to date |
| Confidence in making decisions |
Coordination across different types of assets |
| Understanding of future roles and responsibilities |
Documentation that’s organised and accessible |
| Knowing when and where to find support |
Legal, financial, and tax considerations addressed where appropriate |
| Readiness that develops over time |
Arrangements reviewed as circumstances change |
The two sides are connected: arrangements may only work as intended if the people involved understand them.
How can families begin conversations about future wealth?
Families can begin conversations about future wealth by focusing on purpose, values, and responsibilities before discussing figures. A first conversation doesn't need to cover everything. It can simply open the door and make clear that questions are welcome.
Some broad themes families may find useful:
- What the wealth represents and what the current generation hopes it might achieve
- Which responsibilities may pass to whom, and whether those people are willing
- What each person reasonably needs to know, and when
- What the next generation would like to know
Different family members may need different information at different times. Sharing intentions can also help avoid assumptions about entitlement, while leaving room for flexibility. These conversations tend to be most helpful when they continue over time.
For practical ideas on starting these conversations, watch our webinar on talking to the next generation about money.
When might wealth and responsibility begin to transfer?
Wealth and responsibility can begin to transfer during a person's lifetime, on death, or gradually as ownership and roles change. Many families use a combination. The right approach depends on the family's circumstances, the current generation's security, and how ready the people involved are.
Any lifetime transfer may have financial and tax consequences for you and the people receiving it, so it's worth considering carefully as part of the wider plan. To explore whether passing wealth on earlier might be appropriate, read Living inheritance: should you pass wealth on earlier?
How can different assets affect readiness?
Different assets bring different responsibilities, so the readiness needed can vary depending on what assets may pass.
Investments may need ongoing decisions about objectives, risk, and time horizons.
Property can involve maintenance, letting, and joint decisions where ownership is shared, and may be valuable but difficult to divide.
Business ownership shows clearly why human readiness matters. Ownership, leadership, management, and the economic benefit of a business are different things, and may pass to different people. One family member might inherit shares without wanting a role in running the business, while another might be well suited to leadership without being a major owner. A successor may be ready for ownership but not for day-to-day leadership, or the other way round. Each role may need its own preparation, and those involved may have different expectations about control, income, and direction. Recognising these distinctions early can help a family think realistically about who is willing and able to take on each responsibility.
Trust interests may involve responsibilities for trustees and considerations for beneficiaries. For more on how trusts can fit into long-term family planning, read Family trusts: control, flexibility and planning for future generations.
International interests, such as assets held abroad or family members living in different countries, can add further complexity. Where assets, ownership, or family circumstances become complex, read Estate planning for complex family wealth.
What role can family governance play?
Family governance can help families agree on how they communicate, make decisions, and share responsibility over time. It doesn't need to be formal. For some families, it may simply mean regular conversations. For others, a more structured approach may be more suitable as wealth, family size, or complexity grows.
In practice, that might mean agreeing how decisions get made, who does what, and what happens if a key person can no longer act. Choosing who could step in and make decisions on your behalf can be part of that. To find out more, read [Power of attorney article title.
What readiness gaps might families overlook?
Families may overlook readiness gaps that sit between the people and the arrangements, because each part of the picture can look fine on its own. Possible gaps include:
When might coordinated professional support be useful?
Coordinated professional support may be useful when a family's arrangements involve several types of assets, complex family circumstances, or questions that no single professional can answer alone.
Depending on the circumstances, this might include financial planners, investment managers, lawyers, tax advisers, trustees, and business or succession specialists. Coordination matters because decisions in one area can affect another, and because the family's intentions should guide all of them.
Questions families may wish to consider
These high-level questions may help families see where more preparation could be useful.
Prepare the people
- Are future inheritors prepared for responsibility as well as ownership?
- Could different family members have different expectations?
- What happens if a future decision-maker is unwilling or unprepared?
- Could trustees, executors, or beneficiaries need different forms of preparation?
Prepare the plan
- How can the current generation's security be protected while supporting others?
- Does ownership need to pass at the same time as responsibility, or control at the same time as economic benefit?
- Could an asset be valuable but difficult to divide, manage, or maintain?
Connect the expertise
- Are legal, financial, and family arrangements based on the same intentions?
- Do the people involved understand where professional support may be needed?
Preparing the family for the Great Wealth Transfer
Headlines about the Great Wealth Transfer tend to focus on how much money will change hands. For your family, the more useful question is whether everyone's ready for what comes with it. Preparing the people and preparing the plan go hand in hand, and the earlier you start, the more time everyone has to feel comfortable.
If you'd like to talk through what this means for your family, our Wealth Management and Financial Planning Teams can help you bring the family and financial sides together. Speak to your usual Rathbones contact, or get in touch using the form below.
