The Great Wealth Transfer
Inheritances were meant to unite families. Instead, shifting wealth, complex laws, and modern dynamics are driving record disputes.
According to the article, The great wealth transfer is giving Americans another reason to argue, Americans have a new beef – a legal one, that is.
As more than 11,000 baby boomers now turn 65 years old every day, approximately $124 trillion is expected to shift to younger generations and charities through 2048, according to Cerulli and Associates. Even with financial advisers helping Americans prepare both boomers and heirs for the largest wealth transfer in history, more disputes are arising, data show.
Between 2020 and 2024, the number of probate and estate cases entering state courts rose about 32 percent, based on data from 39 states, according to the independent nonprofit National Center for State Courts.
Much of the increase is tied directly to the massive intergenerational wealth transfer, experts said. As assets shift to Gen X, millennials and Gen Z, planning gaps are turning into lawsuits, hurting relationships and eating into inheritances, they said.
“Traditionally, wealth moves from one spouse to the survivor and then to the kids,” said Scott Rahn, attorney and founding partner at RMO LLP. “But now, things are complicated with blended families and non-traditional families.”
The rise of 401(k)s also has complicated inheritances because they have very specific rules, he said. By federal law, spouses automatically inherit 401(k)s.
However, if an ex-spouse remains listed as the 401(k) beneficiary, they may legally inherit the funds even if they waived their rights to it in a divorce settlement. The estate may be able to sue the ex-spouse for the funds, but only after distribution in some jurisdictions.
Whoever inherits the 401(k) can legally change the beneficiaries, which means your retirement savings may end up with someone you did not intend to have it.
Why Can’t We Get Along?
Many issues can arise in blended or non-traditional families because laws tend to favor nuclear, biological and marital relationships, and often exclude stepchildren and unmarried partners.
More than half of all Americans have either been or will be included in a blended family during their lifetimes, with 1,300 new stepfamilies forming every day, according to nonprofit The Stepfamily Foundation.
Stepchildren are not automatically considered legal heirs unless they are legally adopted, so they must be specifically named in estate planning documents or risk being unintentionally disinherited.
Disputes also can arise due to perceived favoritism between biological and non-biological children and surviving spouses and children, experts said.
How Much Do Poor Planning and Disagreements Cost?
Just having to go through probate, a legal process that distributes a dead person’s assets and settles their debts, can take many months and cost thousands of dollars.
According to the American Association of Retired Persons (AARP), probate costs run about $1,500 but vary widely from state to state and depends on the size of the estate.
Some lawyers estimate total probate costs at around 4 percent to 7 percent of the estate’s value, covering legal, administrative and court fees required to settle an estate.
If a dispute arises, such as contesting a will or trust or alleging breach of fiduciary duty, costs can spiral into the tens of thousands of dollars, lawyers said.
How Can Americans Avoid Disputes?
Some things to consider, experts said, include:
- Plan for flexibility: This “is probably the best way to plan,” Rahn said. “We often see a lot of plans that have very specific requirements and inflexible requirements (such as in irrevocable trusts), which then you end up in a situation where, people change, their situations change, and then the plan can't address those changes and circumstances.”
- Update documents: Regularly update your documents, including beneficiary information, to account for changes in financial situation, marriages, divorces or any new members of a family including through formal adoption or grandkids, and your feelings towards any of them or anyone else in your will.
- Family meetings: “The single most important thing that people don't do is to have a family meeting or sit down to talk about these issues,” Rahn said. Conversations about who's going to be in charge, who's not, and who's getting what are difficult, but that “soft side of this science of estate planning is really important” to ward off fights.
Two-thirds of givers admit to procrastinating family wealth-transfer conversations, according to a national RBC Wealth Management survey. Only 39 percent have provided guidance or instructions to their heirs on what they should do with their inheritance, including how to spend and invest it or give it away to charities.
If relationships are too strained to have those discussions, make sure the reasoning behind estate planning decisions is clear in planning documents and with your estate planning professionals, said Philip Herzberg, a lead financial adviser for Team Hewins, LLC, in a blog post.
Discussion Questions
- Define probate.
Probate is the legal process of administering a deceased person’s estate. This includes validating their will (if one exists), identifying their assets, settling any debts and taxes, and distributing the remaining estate to the correct beneficiaries.
- What accounts for the fact that between 2020 and 2024, the number of probate and estate cases entering state courts rose approximately 32 percent?
As indicated in the article, much of the increase in the number of probate and estate cases entering state court systems is tied directly to the massive intergenerational wealth transfer resulting from the aging (and dying) baby boom generation. As of early 2026, there are approximately 70 million to 76 million baby boomers living in the United States, representing individuals born between 1946 and 1964. The oldest members of this generation are turning 80 in 2026, and all will be age 65 or older by 2030. They constitute a significant demographic group, making up roughly 15 percent of the U.S. population.
- The article indicates that poor estate planning can lead to a lengthy and expensive probate process. In your reasoned opinion, why is poor estate planning a common problem, particularly given the difficulties that invariably lie ahead in the probate process?
According to Retirement Living, approximately 76 percent of Americans die without leaving a will (https://www.retirementliving.com/best-wills-and-trusts/what-percent-of-people-die-without-a-will). This is a shocking statistic, especially in light of the fact that this complicates the probate process (the laws of intestate distribution apply when someone dies without leaving a will, and the rules regarding intestate distribution vary according to state law), can lead to complex legal battles and prolonged estate disputes, and may very possibly result in unintended outcomes (i.e., the decedent’s property being distributed to unintended heirs).
Many famous (and wealthy) celebrities have died without leaving a will, including Aretha Franklin, Prince, Jimi Hendrix, Pablo Picasso, and Howard Hughes. Pablo Picasso’s vast estate took six years and $30 million in legal fees to settle due to disputes among his heirs. In Howard Hughes’ case, the billionaire’s $1.5 billion estate (worth approximately $6.4 billion in today’s dollars—Mr. Huges died in 1976) was divided among 22 cousins after numerous fake wills surfaced.
Several factors have been attributed to so many people dying without a will, including:
- A lack of awareness or urgency—Many people do not realize how critical a will is until a family member is involved in probate.
- Perceived complexity—Estate planning can seem complicated or time-consuming, leading people to delay it.
- The assumption that state law will take care of the situation—Some people believe that if they die without leaving a will, the state will automatically distribute assets fairly, without understanding that intestacy rules can be rigid and may not reflect personal wishes.
- Financial or emotional barriers—Costs, legal jargon, or the emotional weight of making decisions about death can deter people from creating a will.
- Cultural or generational factors—In some communities, wills are less common, and younger generations may be less familiar with the process.
