By 2030, roughly $30 trillion is slated to change hands in the U.S.1
Often referred to as “the great wealth transfer,” this exchange will happen as aging baby boomers pass on assets to the next generation, and women are set to inherit a large portion. However, only 22 percent of women have a comprehensive wealth transfer plan of their own in place.2
“Women sometimes are hesitant to make a financial plan if they haven’t played a decision-making role in financial matters before,” says Sally Mullen, senior vice president and chief fiduciary officer for U.S. Bank Wealth Management. In this Q&A, Mullen shares strategies for how women can plan for a potential inheritance, build financial confidence and ensure they have their own wealth transfer plan in place, too.
Q: What can women do now to prepare for an inheritance and plan financially for their future?
Mullen: Start educating yourself about your current situation. Understand your net worth, monthly cash inflow and outflow, and how your assets are titled. If you know you will be inheriting money from your parents or other relatives, ask them if they are willing to share the general terms of their wealth transfer plan.
Regardless of whether you’ll inherit money, ask yourself these basic but often overlooked questions:
- When do I want to retire and what’s my road map for getting there?
- What kind of relationship do I have with my financial professional and what kind of help do I need from them?
- How will I plan for the decumulation stage of life as opposed to the accumulation stage? That might mean retirement in the classic sense or perhaps you eventually want to trade a high-income role in the corporate world for a less lucrative nonprofit role. How will you gain the financial freedom to do that?
It’s never too early to start thinking of these things.
Q: What does a solid wealth transfer plan look like?
Mullen: Wealth transfer refers to how your assets will be distributed if something happens to you. Not having a will might not be problematic if everything you own has a named beneficiary, but for most people, that’s not the case. If you have assets that are solely in your name, such as real estate or bank accounts, you should have a will or even perhaps a revocable trust in place.
Consider appointing a power of attorney so someone can act for you if you’re not available or if you’re incapacitated. And although it’s not technically a financial estate planning tool, we also ask clients whether they have a healthcare directive. A healthcare directive explains the type of care you wish to receive should you have major health issues and identifies who should make healthcare decisions on your behalf if necessary.
Q: What are some of the unique challenges women face when it comes to financial planning?
Mullen: This is a generalization, but I’ve noticed women can be more hesitant when it comes to financial planning.3 If you’re just starting out and don’t yet have a lot of assets or an advisor, start educating yourself to build up that financial confidence. Learn as much as you can about personal finance and start asking questions, so you feel more comfortable.
If the unexpected happens and you have to navigate an unforeseen circumstance, it’s better to be prepared and not have to educate yourself quickly under high-stress circumstances.
Q: What do you think the future holds for women in the financial arena?
Mullen: Things are not the same as they were 50 years ago, and they won’t be the same going forward, either. There are obviously many more women working and getting advanced degrees. Women will start to move the market more as individual investors and control more of the wealth in this country. I hope we continue to see the industry adapt to that.
We also need to develop approaches that resonate more with women than they have in the past. There’s always a need for more sensitivity to women’s financial issues and more support for women entrepreneurs and business owners. The best thing we can do is help women start educating themselves early on about the best ways to manage their wealth and plan a secure financial future.