Baby Boomers To Leave $20 Trillion Legacy Over Next Forty Years

by Mike Godfrey, Tax-News.com, Washington

04 August 2004

New research has revealed that members of the baby boom generation stands to pass on wealth in the region of $20 trillion to relatives and friends over the next forty years, presenting an unprecedented opportunity for tax and financial planners.

According to a report published by Boston-based research firm Cerulli Associates, from 2001 through 2046 some $14.16 trillion will be inherited by the friends and relatives of those born between 1946 and 1964 in what has been described as a “demographic tsunami.” A further $5.78 trillion is expected to be donated to charity.

Whilst the focus of firms in the financial services industry has been on selling products that provide income throughout an investor's lifetime, only a minority of firms have begun to focus on preserving the wealth that will inevitably be passed on, says Cerulli.

The issue is especially relevant given the uncertainty that surrounds the future of the estate tax. Whilst estate tax rates are set to decline over the coming years before being extinguished in 2010 for a period of one year, estate tax will return again in 2011 unless opponents of the levy in Congress succeed in repealing it.

In Ceruilli’s estimation, the federal government will likely succeed in getting its hands on $12.6 trillion of the babyboomers' wealth as a result of the estate tax.

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