Decades of careful wealth building can create a lasting legacy for future generations, but one of the biggest threats to that legacy may have little to do with financial markets.
The conversations families keep avoiding about inheritance and estate plans are putting trillions of dollars at risk across the country.
Research firm Cerulli Associates projects that roughly $124 trillion in assets will change hands through 2048, with about $105 trillion flowing directly to heirs. Nearly $100 trillion of that total will come from baby boomers and older generations, making it the largest private wealth transfer in history.
Fidelity Investments, in its “Passing on wealth” guidance for parents preparing heirs for inheritance, identifies a lack of open communication about money and expectations as a leading threat to preserving family wealth across generations.
Family communication failures destroy more fortunes than do bad investments
Roy Williams and Vic Preisser tracked 3,250 wealthy families over two decades and found that 70% of wealth transfers failed by the next generation, according to their book “Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values.”
By the third generation, that figure reached 90%, making sustained family wealth the exception rather than the norm, Kiplinger reported.
Breakdowns in communication and trust accounted for about 60% of all wealth transfer failures, while another 25% stemmed from heirs who lacked the financial literacy to manage what they inherited, Kiplinger reported.
Also read: Fidelity says $19,000 a year can change your legacy
Brad Klontz, associate professor of practice at Creighton University Heider College of Business and Founder of the Financial Psychology Institute, told Kiplinger that families routinely neglect the behavioral roots of inheritance failure.
<strong>The biggest mistake parents can make is passing down money without communicating the family values that drive your thinking</strong>.
Investment mistakes, poor tax planning, and legal errors accounted for fewer than 15% of cases in which inherited wealth vanished, Moran Wealth Management confirmed.
A Fidelity study found that nearly half of families have yet to have critical estate planning conversations, even as death remains the primary transfer event.
Scott Kerr, vice president of advanced planning at Fidelity, has recommended that parents begin setting financial expectations when children are young, so that inheritance conversations evolve naturally as heirs gain maturity.
Wealthy families keep postponing inheritance conversations
An RBC Wealth Management survey of 1,500 high-net-worth Americans found that two-thirds planning to leave an inheritance had postponed critical family wealth conversations.
Only 39% of Givers surveyed had provided guidelines to their heirs on how to spend, invest, or donate the assets they were set to receive.
The gap between intention and action is striking: 99% of heirs told RBC that they planned to honor their parents’ wishes regarding inherited assets.
Only 26% of those leaving wealth believed their heirs were ready to receive it, while recipients overwhelmingly wanted clear guidance.
Julie Virta, wealth advisor executive at Vanguard, has warned that families who avoid estate conversations leave heirs facing doubt, resentment, and fractured relationships.
Postponed conversations leave heirs without basic estate protections
The same silence that prevents families from discussing inheritance also stops them from creating the legal documents an estate requires for protection.
About 56% of American adults lack any of the five core estate planning documents: a will, trust, medical power of attorney, financial power of attorney, or HIPAA authorization, the 2026 Trust & Will Estate Planning Report found.
Will ownership dropped from 31% in 2025 to 26% in 2026, even though 73% of respondents described estate planning as personally important to their families.
More Fidelity:
- Fidelity breaks down IRA rules that catch heirs off guard
- Fidelity says retirement health costs just hit a new high
- Fidelity warns Roth IRA conversions can backfire
The federal estate tax exemption now stands at $15 million per person under the One Big Beautiful Bill Act, signed into law in July 2025.
That higher threshold gives most families room to transfer assets without a federal tax hit, but it does not eliminate the need for direct conversations.
Families that never discuss estate plans rarely establish trusts, leaving heirs to repeat the generational collapse that communication failures have driven for decades.
Fidelity says trust structures turn heirs into stewards
Fidelity’s analysis outlines several legal vehicles that require families to discuss values and expectations before assets change hands across generations.
Establishing a trust forces a family to articulate the timing, purpose, and conditions for distributions, replacing passive inheritance with structured dialogue.
A spendthrift clause in a trust can prevent beneficiaries from pledging future distributions as collateral for credit, Kerr noted in the Fidelity analysis.
The Health, Education, Maintenance, and Support standard, known as HEMS, directs trust assets strictly toward a beneficiary’s essential expenses and forces families to define what those expenses include before distributions begin.
Each of these vehicles turns passive inheritance into structured dialogue, requiring the kind of direct family conversation that Williams and Preisser identified as the deciding factor in whether wealth survives to the next generation.
Open dialogue and financial literacy account for 85% of the likelihood that a wealth transfer will endure or collapse within a single generation, Moran Wealth Management reported.
Related: Fidelity finds 4 in 5 parents skip key estate plan step
