Wealth transfer is a crucial aspect of financial planning, especially for high-net-worth individuals and families. The transfer of wealth from one generation to the next can be complex, involving various legal, tax, and personal considerations. We will explore the different strategies for multi-generational wealth transfer, including the rules and regulations that govern them.


Overview of Multi-Generational Wealth Transfer

Multi-generational wealth transfer involves the transfer of assets from one generation to the next, often as part of an overall estate planning strategy. The goal is to preserve and grow wealth across multiple generations while minimizing taxes and other fees. Effective wealth transfer requires careful planning, taking into account the unique circumstances and goals of each family.


Strategies for Multi-Generational Wealth Transfers

Several strategies can be used for multi-generational wealth transfer, including the following:


Giving assets as gifts during one’s lifetime can be an effective way to reduce the size of an estate and minimize estate taxes. The annual gift tax exclusion allows individuals to give up to a certain amount (currently $18,000 per recipient per year, $36,000 per recipient from married couples) without incurring gift taxes.


Trusts are legal entities that can hold and manage assets on behalf of beneficiaries. There are various types of trusts, including revocable living trusts, irrevocable trusts, and dynasty trusts, each with its own advantages and disadvantages. Trusts can provide asset protection, privacy, and tax benefits.

Beneficiary designations

Designating beneficiaries for retirement accounts, life insurance policies, and other financial assets can ensure that these assets pass directly to the intended recipients without going through probate.

Charitable giving

Charitable donations can provide tax benefits and allow individuals to support causes they care about. Donor-advised funds, private foundations, and charitable remainder trusts are some strategies for incorporating charitable giving into a wealth transfer plan.

The IRS states you may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. You may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.


Rules and Regulations Governing Wealth Transfers

Several rules and regulations govern wealth transfer, including:

Estate tax

The federal estate tax applies to estates with a value above a certain threshold (currently $13.61 million for individuals and $27.22 million for married couples). State estate taxes may also apply, depending on the state of residence.

Gift tax

If you give more than the exclusion to a recipient, you will need to file tax forms to disclose those gifts to the IRS. You may also have to pay taxes on it. If that’s the case, the tax rates range from 18% up to 40%. However, you won’t have to pay any taxes as long as you haven’t hit the lifetime gift tax exemption.

Generation-skipping transfer tax

The generation-skipping transfer tax (GSTT) is a federal tax that results when there is a transfer of property by gift or inheritance to a beneficiary (other than a spouse) who is at least 37½ years younger than the donor. When transferring assets to heirs beyond the next generation, both the generation-skipping transfer tax (GSTT) and gift/estate taxes may apply. This is currently a flat rate at 40%.



Multi-generational wealth transfer is a complex process that requires careful planning, taking into account various legal, tax, and personal considerations. Contacting an industry professional is the best way to ensure that you are properly set up to successfully transfer your wealth to the next generation.

Legal Stuff

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation. Material provided by Concenture Wealth Management.