Darling, It'll All Be Yours--Soon

The inheritance boom is quietly reshaping how we think about death. Only a few decades ago, most Americans didn't own enough to worry much about what they left behind. Many middle-class families could pass along a house. The fortunate might add small stashes of stocks or bonds. The prudent executed a will, but elaborate estate planning and tax avoidance was the preserve of the wealthy.

No more. This ancient truth, like many others, is succumbing to advancing affluence. The baby-boom generation stand to collect enormous sums from their parents--and pass along even larger sums to their own children. These huge transfers have thrust more and more Americans into the sobering and often-contentious business of trying to control their wealth from the grave. It's life's last identity crisis.

The way we leave our money says a lot about how we want to be remembered--and if we blunder, how we may actually be remembered. For some, distributing what they've earned may be harder than earning it. Children, charities, relatives (and the government) all want their piece. Parents worry that huge inheritances might "affect their children's work ethic and sense of responsibility," says Joan DiFuria, a San Francisco therapist who works with wealthy families. Children often are "resentful [if] there are strings attached."

Here are some numbers. John Havens and Paul Schervish of the Social Welfare Research Institute at Boston College have estimated Americans' future estates. Between 1998 and 2017, they put the total between $11.6 trillion and $17.5 trillion. This would reflect most of the World War II generation's wealth. (By 2017, someone born in 1925 would be 92.) Between 2018 and 2052--covering the baby boom--estates would be even larger: between $29 trillion and $119 trillion. (All figures are in inflation-adjusted "1998" dollars.)

These immense sums, of course, depend on the economy's performance. In the lowest estimates, household wealth increases 2 percent a year; in the highest, the increase is 4 percent. Americans do deplete their savings as they age--but often not entirely. Many people spend cautiously, because they don't know how long they'll live. Some wealth is tied up in homes, and the truly rich can't spend it all.

As a result, it's not just the superwealthy who now leave sizable inheritances. Charles Visconage, a Merrill Lynch financial planner, says he sees people all the time "who think they'll run out of money before they run out of life... They think of themselves as the man in the street. They've got a four-year-old Oldsmobile that they hope will last another year." They believe they'll exhaust their savings, and when he shows them otherwise, "they're stunned." Toss in a house, life-insurance policies, personal possessions (cars, jewelry), and an estate might run to seven figures.