People Spend $12K on Trusts—Then Forget To Fund Them: The Costly Estate Planning Mistake That Lands Families in Probate

There's been a lot of buzz about the Great Wealth Transfer—an estimated $84 trillion set to move from Baby Boomers to younger generations over the next two decades. But is it really the financial windfall some are expecting? Experts say poor estate planning, shifting economic realities, and rising costs could mean that this transfer isn't as life-changing as it seems.

The Great Wealth Transfer: What's Really Happening?

For starters, a huge chunk of people aren't prepared for this shift. A report by Trust & Will found that while 83% of Americans believe estate planning is important, only 31% have a will, and just 11% have a trust. Worse, 55% have no estate documents at all, leaving heirs to deal with probate, legal fees, and potential family disputes.

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That sounds messy, but some experts aren't too worried. Some experts say that wealth often transfers informally—through gifts, shared assets, and financial support—rather than one big inheritance.

A 2024 IARIW study using SCF data revealed nearly $900 billion in 2021 wealth transfers (inheritances and inter vivos transfers). Inter vivos transfers made significantly exceeded reported inter vivos transfers received, indicating potential underreporting of received inter vivos transfers. In other words, not every family needs a formal trust to pass down money.

Meanwhile, generational wealth is already shifting. A report from KPMG shows that Gen X (born 1965–1980) now holds more property and stock wealth than Boomers. The average Gen X homeowner has $1.31 million in housing wealth, just above Boomers at $1.30 million. In stock investments, Gen X holds about $256,000, compared to Boomers' $206,000.

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Still, some worry that Millennials and Gen Z won't see the same financial success. Student debt, high living costs, and stagnant wages as potential barriers, even if these generations inherit money.

Looking at the numbers, this shift is massive. Cerulli Associates estimates that by 2048, $124 trillion will change hands—$105 trillion to heirs and $18 trillion to charities. The wealthiest 2% will transfer over $62 trillion.

But will it really reshape the economy? Boston College law professor Ray Madoff argues that most of this wealth stays within wealthy families, meaning it won't necessarily reduce economic inequality.

And here's the reality check: many people may not inherit as much as they expect. A  Northwestern Mutual study found that only 22% of Boomers and Gen X plan to leave behind large financial gifts. Rising healthcare costs, longer life expectancy, and potential tax changes could eat into inheritances.

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