Thursday, September 15, 2016

Greatest Transfer of Wealth Coming In World History

By 2026, we will see the greatest transfer of wealth in world history.   Baby Boomer Entrepreneurs that created this wealth, primarily by formation of private companies, will transfer about $3.9 Trillion in the US in inheritance to their Generation X and Millennial sons, daughters, grandchildren and perhaps other family members.  On a world wide basis this transfer of wealth will be more than $30 Trillion.  Of course, politicians and governments everywhere right now are scheming to confiscate their share of this hard earned wealth by various death and inheritance taxes, which is why Estate Planning is so essential.

The question is how many of these privately owned businesses will actually continue to be owned and run by family members.   The answer is probably not very many because Generation X and Millennials are just as likely to monetize their inheritance by selling companies as keep them.  There will always be bigger players in every industry more than willing to buy up successful smaller companies in their goal to grow by acquisition.  Since 70% of employees in the US work for these smaller companies, when these acquisitions take place, their lives will be impacted as well and not always for the best. 

Once the value of a company has been monetized, or converted into cash by family members, there is better than a 50/50 chance that the fruits of Dad's or Mom's years of labor will be gone forever.  What a shame; but maybe it is the circle of life.

Not always, but it could be that people need to start with nothing to create the drive, ambition and very hard work needed to build something great creating wealth in the process.  Very often wealth that comes too easy is taken for granted, which is never good.   In any case, this wealth transfer will take place.  The only question is will it result in a good or bad outcome; or most probably a little of both.  

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