According to a new estimate, the world’s wealthiest individuals are projected to leave $31 trillion to future generations by 2033.
According to Altrata’s Family Wealth Transfer 2024 report, individuals with a net worth of more than $100 million would inherit about half of the $31 trillion, which is more than the US GDP. Generation X (born between the mid-1960s and late 1970s) is the first in line to inherit.
‘We predict that over a quarter of these individuals will wish to pass on their fortunes in the next decade until 2033, resulting in the transfer of a staggering sum of wealth,’ Altrata stated that it used data produced by its Wealth-X business.
The upcoming wealth shift is projected to impact philanthropy, legacy planning, and the family office landscape. Altrata’s research revealed a shift in philanthropic efforts, with younger generations being more focused on environmental and healthcare problems and more inclined to engage in charity than their predecessors.
Generation X: the ‘slacker’ generation take the wealth reins
While millennials and Generation Z inheritors have received a lot of attention, Generation X, who are presently between the ages of 45 and 55, will be the first to inherit their wealthy parents’ fortune. Younger generations are more likely to inherit little inheritance from their grandparents.
The $31 trillion shift would affect several industries internationally, including family offices, financial services providers, luxury goods, non-profits, and charities.
The next generation is more concerned with charity and foundations than their parents, and they have a deeper willingness to participate in causes. As philanthropy becomes more impact-driven, the survey discovered a shift away from more traditional methods to charity and legacy creation.
‘The younger generations are particularly interested in philanthropy and foundations. According to D’Arcy Fellona, Client Success Manager, Financial Services and Luxury at Altrata, there is more involvement and interest in observing the impact of organizations over time. However, this does not inevitably lead to higher donations.
As Generation X prepares to inherit huge money, their increased involvement in environmental and healthcare concerns will undoubtedly affect future philanthropic patterns. The involvement of skilled advisors will be critical in negotiating the difficulties of this mammoth wealth transfer, ensuring that both current wealth holders and their beneficiaries meet their financial and philanthropic objectives.
Who is the typical donor?
Approximately 90% of people transferring money during the next decade are men, reflecting the male-dominated gender gap among the ultra-rich.
Women account for less than 10% of people with more than $100 million of net worth, while over one-third of contributors with $100 million or more are over the age of 80.
Wealthy donors in North America and Europe will account for 71% of global wealth transfers through 2033.
Of the super-rich who pass on their money, 70% will be corporate leaders, 20% will be entrepreneurs, and only 7% will be sole inheritors.
The growing importance of succession planning
Wealth transfers are becoming more common during a family’s head’s lifetime to prepare for future financial stewardship and tax planning.
This transition, combined with expanding global wealth and diverse attitudes among younger generations, highlights the need of families coordinating succession planning early on.