Probate and the Great Wealth Transfer: Why Millennials and Gen Z Should Care

Most people don’t see probate coming until they are knee deep in legal fees. 

What comes with it? A lengthy, stressful, and expensive process for loved ones. On average, the probate process lasts up to 20 months. According to our 2024 Probate Study, only 2% of people anticipate this duration. 

Over the next few decades an estimated $72.6 trillion in wealth is expected to transfer between generations. Financial experts are calling this the Great Wealth Transfer, and it is important now more than ever for Millennials and Gen Z to understand that with the right estate plan you can avoid probate and be prepared. 

The Great Wealth Transfer 

Over the next 20 years there is expected to be trillions of dollars passed down from Baby Boomers and the Silent Generation to younger generations (Gen X, Millennials, Gen Z). Since Baby Boomers are one of the wealthiest generations, they account for nearly half of the country's total wealth. Now that these generations are aging, as they pass away their wealth falls down to their children, prompting the wave of “The Great Wealth Transfer". 

According to Cerulli Associates, a majority of the money expected to be passed down will go to Gen X and Millennial heirs, along with a great portion being donated. Before it reaches these heirs, around $54 trillion will be transferred to spouses, with a majority being widowed women in older generations. 

What is Included in the Great Wealth Transfer?

The Great Wealth Transfer will include not only cash, but real estate, businesses, tangible assets, and more. Younger generations can expect to inherit equities such as stocks, bonds and other investments. Along with money included in retirement accounts like IRAs and 401K’s. 

Not only are these generations expected to receive assets and money, but also the legal and financial responsibilities that come with managing it. 

What is Probate

Probate is a court supervised legal process that oversees the distribution of a deceased person's assets. If there is a will in place, probate will verify it and assign (if not already appointed) an executor to manage the estate. Before distributing the assets to beneficiaries, probate ensures that any taxes or debt is paid off. Once settled the remaining assets will be passed down according to the will, or state intestacy laws if a will is not in place. 

Why Millennials and Gen Z Should Care

The Great Wealth Transfer has the potential to give Millennials and Gen Z great opportunities. With the amount of wealth expected to transfer between generations it could provide financial security, reduce debt, increase investments, or even facilitate early retirement. 

Without a proper estate plan in place, assets can get tied up in probate court. If not planned for, this process could provide delays and challenges for heirs. Probate can significantly impact the transfer of wealth between generations. According to our 2024 Probate Study, findings show that 56% of respondents have no idea what the probate process costs. Ultimately probate on average ranges between 3-7% of the total value of the estate. 

How to Avoid Probate

Although probate can be a lengthy and overwhelming process, there are steps you can take to avoid it. 

Step 1: Create a Trust Plan

If you or your parents don’t have a Trust plan in place, don’t worry, it’s not too late to start. A Living Trust allows your assets to transfer to your beneficiaries with no court required. 

Step 2: Funding Your Trust

Once you have set up a Trust, you need to move your assets into it. This can include anything like your home, bank accounts, and investments. 

Step 3: Assign Beneficiaries

Certain assets such as life insurance policies or retirement accounts allow you to designate beneficiaries to receive these assets in the case of death. 

Step 4: Keeping Your Plan Updated

Regularly reviewing and updating your after major or minor life changes can help avoid confusion or delays in the case of probate. 

Step 5: Communicate With Loved Ones

Letting your family or friends know how to access these documents and what your wishes are helps reduce misunderstandings or disputes that could lead to court. 

Be Prepared for What’s Next

Whether you are set to inherit assets or want to protect the legacy you have built, having a solid estate plan in place is key. The Great Wealth Transfer isn’t just a shift in finances, but a wake up call for Millennials and Gen Z to understand the importance of estate planning. Understanding probate and how to avoid it can save loved ones time, money, and emotional burden. Take action and protect you and your loved ones future. 

At Trust & Will, we keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home. Take our free quiz to see where you should get started, or compare our different estate planning and settlement  options today!

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