The largest wealth transfer in history – what it means for your money and savings

The United States stands on the brink of the largest wealth transfer in history; Nearly $84 trillion will be passed from generation to generation by 2045. It is expected to have a tremendous impact on heirs, older loved ones who need help managing their finances, and others who must adapt to a changing financial future. It will impact retirement, investments and tax strategies for decades. Here’s how to prepare, whether you’re leaving an inheritance or receiving one.

Wealth transfer size and timeline

Industry analysts predict that baby boomers — those born between 1946 and 1964 — will pass on nearly $84 trillion in wealth to their heirs by 2045. This is nearly three times the current GDP of the United States

The timing, tax implications, and distribution methods associated with the transfer of wealth will affect how many heirs, primarily Generation For this reason, all parties must be prepared.

“I don’t see Millennials or Gen Z being fully prepared for the wealth transfer we see on the horizon,” said Kevin Kaultzman, CFP and founder of EBNY Financial. “Many in these generations have not embarked on meaningful financial planning, which may stem from limited financial education or simply not having discretionary income left over after covering the basics.”

“An unexpected inheritance should be viewed as a stepping stone to financial freedom, not just a way to finance a summer vacation abroad,” Kauzman asserts. “By making a plan and allocating money wisely, heirs can set themselves, their children, and even future generations up for long-term success.”

“Millennials and Generation X will inherit the largest share of that, followed by Generation Z,” he said. “These generations think about money differently than baby boomers did; more emphasis on flexibility, experiences and, in some cases, sustainability, and that will shape how this transfer of wealth impacts the economy.”

Rules and main ideas

There are certain tax rules to keep in mind regarding wealth transfers. It will affect how much beneficiaries receive and influence the inheritance strategies implemented by families.

Exemption from real estate taxes

There is a limit to the amount of wealth that individuals can transfer to others without tax consequences. As of 2025, during a lifetime an individual can transfer up to about $13.99 million tax-free to his or her heirs without paying federal taxes. For married couples filing jointly, the amount is $27.98 million. Any amount above these limits will be taxed.

Understanding this limit is important for people who intend to leave their homes, investments, and other assets to their heirs. While this level is not a concern for most families, those with higher net worth will need to plan strategically to ensure as much of their wealth as possible reaches their beneficiaries.

Exclude annual gifts

In addition to the lifetime estate tax exemption, the IRS also allows the annual gift exception. For 2025, individuals can donate up to $19,000 per person to any number of people, without reporting it to the IRS. Any more than that, and the IRS deducts it from the lifetime cap ($13.99 million for individuals, $27.98 million for married couples filing jointly.) The money is only taxed when it exceeds those several million-dollar limits.

Sai Jean, a single mother, has two children, Tom and Timothy. Jan can give Tom up to $19,000 and Timothy up to $19,000 in 2025 without telling the IRS. If Jan wants to donate more than that, he’ll need to report it to the IRS, and that money will be deducted from his lifetime cap of $13.99 million.

Basically a step-up

The increased basis requirement states that when you inherit assets such as real estate or stocks, your cost basis is reset to the current market value.

For example, if your parents bought $200,000 worth of stock that is now valued at $500,000, they would have to pay capital gains tax on the $300,000 if they sold it for $500,000. The step-up rule basically states that if you inherit the stock, your cost basis will be $500,000, not $200,000. If you then sell it for $500,000 after inheriting it, you won’t owe any capital gains tax. This results in enormous tax savings over years or even decades of capital appreciation and intelligent preservation of wealth from generation to generation.

Trust

Trust funds are very helpful. They control how assets are distributed, allowing the donor to decide how and when beneficiaries will inherit the estate. They help you avoid probate, which can be time-consuming and expensive, especially for large estates, and they protect your beneficiaries from financial mistakes. They can also reduce property taxes.

Actionable steps for families

For elderly parents

For those who will be passing on their wealth, most likely parents or grandparents, it is important to organize early. You don’t want to scramble at the last minute or leave a mess of assets and paperwork for your heirs to sort through.

“Most people don’t even have the basics of a will, a durable power of attorney, and advanced directives,” Kaultzman said. “Estate tax issues are also a major dilemma, especially at the state level. For example, New York clients may find themselves leaving a significant portion of their estate to Albany if they do not plan ahead. Families can avoid these problems by being proactive, engaging with financial planners, public law accountants, and attorneys early, and making sure the right structures are in place before the transfer of wealth occurs.”

The best way to preserve your wealth and ensure that your heirs receive as much of it as possible without issue is by having a comprehensive estate plan that may include will, trust, and gift strategies. Consider taking advantage of the annuity gift exclusion to gradually distribute assets over time, and consider using a trust to avoid the probate process and protect your beneficiaries.

Additionally, it is important to have conversations with your heirs about your plan and wishes. This helps keep everyone on the same page and prevents conflicts.

“Even with proper estate planning, families can still face unexpected challenges,” Kaultzman said. “That’s why it’s essential to create some framework, whether it’s trust, family documents, or just open communication. A clear plan not only preserves wealth, but also preserves family relationships during an already difficult time.”

For potential heirs

If you are the child or grandchild of a baby boomer and expect to receive an inheritance, talk to your parents or grandparents, if you haven’t already. You may be the one administering the estate at the time of your death, so having everything arranged in advance will help the inheritance process go smoothly.

Furthermore, think about what you will inherit and how that will affect your finances. Receiving shares or property on a step-up basis will help you sell (if you choose to do so) without incurring a large capital gains tax. For retirement planning, an inheritance may change your retirement date, your savings goal, your retirement plans, and more.

“One possible outcome is an increase in housing stock,” Kaultzman said. “Many baby boomers are not downsizing as quickly as previous generations, which means larger single-family homes remain occupied by empty nesters.” “As these homes move, whether they are kept in families or sold, we can see more opportunities for younger families in the housing market.”

Bottom line

The massive transfer of baby boomer wealth will have a profound impact on many individuals’ personal finances, as well as the economy.

Families can prepare for this transition now by using estate planning strategies, which include trusts, wills, and strategic gifts. Heirs can benefit from understanding applicable tax rules, such as step-up in basis.

Candid conversations and smart preparation can help ensure a smooth inheritance process, reduce the potential for disputes, and preserve wealth.