A return to traditional attitudes about inheritance, which place an emphasis on the family and continuity, is occurring, according to US Trust’s 2012 Insights on Wealth and Worth survey.

In the survey of 642 high and ultra high net worth individuals, 76 per cent of those aged between 18 and 46 said it was important to leave a financial inheritance to children, as did 73 per cent of respondents over the age of 67.

However, only 55 per cent of baby boomers said it was important, implying the youngest and oldest generations hold more similar views on this issue.

“[Gen X and Y] are pragmatic, proactive and disciplined in their approach to investing and wealth management, surpassing baby boomers in planning for wealth for themselves and their families,” said US Trust.

Social and economic influences could have made younger generations more cautious in their approach to planning, and thus more similar to pre-baby boom generations, said Keith Banks, president of US Trust: "The next generation has not experienced the consistently strong economic growth or investment returns that baby boomers experienced during the longest bull market in history."

Among respondents who said it wasn’t important to leave a financial inheritance to children, one in three said they would rather leave their money to charity.

There was a common strand of thought running through all the generations though: family harmony and financial security were top goals for respondents of all ages, although each generation emphasised different elements of family responsibility.

So far, 40 per cent of Gen X and Y have established plans for parents’ eldercare needs; the comparative figure for baby boomers is just 20 per cent. Meanwhile, 54 per cent of Gen X and Y have already paid for relatives’ medical costs at some stage, compared to 42 per cent of baby boomers.

For many, this means financing long-term care for aging or infirm parents or relatives: 38 per cent of those between 18 and 46 are meeting such costs, while 30 per cent of baby boomers are. Just 6 per cent of baby boomers have purchased long-term care insurance for their parents compared to 33 per cent of Gen X and Ys.

Communication breakdown

The survey also revealed a breakdown of communication between generations when it came to discussing these vital matters. Over half of respondents to the survey had never discussed eldercare plans with their children, and 43 per cent had never talked to the generation above them about what their expectations and plans were.

A similar veil of secrecy was drawn over family wealth. Only 37 per cent of wealthy parents in the survey had fully disclosed their family’s level of wealth to their children, and around half said they had disclosed “only a little.” Older respondents (aged 67+) said this was because “they were taught never to discuss wealth with anyone.”

On the other hand, baby boomers, GenX-ers and GenY-ers are “more comfortable” talking about money, said US Trust, “but most either haven’t gotten around to it or are concerned that it will negatively affect their children’s work ethic.”

Meanwhile, 61 per cent of all wealthy parents in the survey had concerns about how prepared their children were for their inheritance.

Unprepared

Many people in the survey had only the “basic elements” of an estate plan, despite their level of wealth, said US Trust. “Nearly six in 10 respondents overall do not have a comprehensive estate plan, including 66 per cent of baby boomers, 70 per cent of those under the age of 47 and 48 per cent of those over the age of 67.”

Specifically, 51 per cent had a revocable trust in place and 22 per cent had an irrevocable trust.

Among the main reasons for not having a trust were a belief that a will was enough; procrastination; and the belief the family’s level of wealth did not warrant a trust.

Privacy and security concerns

Younger wealthy people are more likely to understand the risks around digital technology and take preventative steps to protect their online information, according to US Trust. However, respondents appeared to be more fearful than proactive when it came to online security. Around one-third of HNW households said social media and online information had increased the risk to their privacy and safety, but only 13 per cent had tried to educate themselves on these risks, and around a similar number had conducted an analysis of online information about themselves or their family.  

Online privacy and safety concerns appeared to be linked to age in the survey: 37 per cent of the youngest generation said they were concerned, compared to 20 per cent of baby boomers and 10 per cent of the oldest generation.

The top concerns related to privacy and security were: financial ID theft; online theft; and intrusion of privacy.