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5FORCNY REVISITED: With the Great Wealth Transfer Comes Great Opportunity

Updated forecasts suggest that U.S. households will transfer more than $84 trillion over the next quarter century. For advisors, this transition continues to signal major planning opportunities as more baby boomers turn their attention to retirement and estate planning. But how will this impact us closer to home?

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TOM GRIFFITH, AEP®, CHFC®, CAP®

We are in the midst of the greatest wealth transfer in modern history. Chances are, as advisors, you’ve probably heard some version of this phrase so often that you could recite it like it’s the chorus of your favorite song. What began decades ago as the Silent Generation and WWII Generation started passing wealth down to baby boomers through their estates is picking up even more steam as those same baby boomers, most of whom are now of retirement age, are preparing to transfer assets to their children.

Updated forecasts suggest that U.S. households will transfer more than $84 trillion over the next quarter century. We know that these numbers will have far-ranging economic and demographic implications for our country as a whole. For advisors, this transition continues to signal major planning opportunities as more baby boomers turn their attention to retirement and estate planning and an increasing percentage of Gen X-ers and millennials become primary wealth holders. But how will this impact us closer to home?

We first set out to answer this question in 2011 when we commissioned a study to analyze what the generational wealth transfer could mean for Central New York. In many cases, assets were expected to pass to heirs living outside of the region, thus decreasing a vital flow of support to local nonprofits. That’s when we first announced our 5forCNY campaign, encouraging community members to consider leaving a portion of their estates to local charities.

Over the last decade, we saw a growing number of community members recognizing the importance of keeping their charitable dollars in their home communities. At the Community Foundation alone, the number of planned legacy and estate commitments – which will benefit a wide range of local charities and causes – has more than doubled as people are increasingly treating the community as one of their heirs in their financial and estate plans. Many individuals have also created charitable funds that enable their children or grandchildren to maintain a connection to the area where they grew up and made cherished memories.

Just as the transfer of wealth is ongoing, so is our 5forCNY campaign. While the list of community needs to be addressed may be great, the opportunity we all have to make a difference together is even greater. The lives of current and future CNY residents, including our children and grandchildren, would be immeasurably benefited if everyone gave 5% of their assets – whether they be large, small or anywhere in between – to charity through their estate.

In 2022, an updated study conducted by LOCUS Impact Investing found that on average, $79,700 per household will transfer from one generation to the next in Central New York over the next 10 years. This adds up to a total projected transfer of $25 billion.

If 5% of that – nearly $1.3 billion – was designated for local charity in a charitable endowment, an estimated $74 million would be available for nonprofit grantmaking each year! In other words, an average gift of $4,000 from each household transfer could make a significant difference in our community for generations to come. Even the most modest gifts, when combined and compounded through disciplined endowment investment and stewardship, could yield exponential support for the organizations that drive positive change in our five-county region.

With this renewed study also comes a renewed opportunity to spread the word about some easy, accessible options for giving back. We now know more about some of the common motivations and barriers to legacy giving. Many people want to give back, but assume they have to choose between family and charity. Others might think they don’t have enough to give. Many simply don’t know where to start.

You can start by simply asking your clients two questions:

  1. Do you have charities that you care about?
  2. If so, would you like to include those organizations in your financial and estate plans?

We are available to help with any of your client’s charitable planning needs, including how to help your clients root their charitable legacies in the place where they themselves have put down roots. To learn more about 5forCNY, visit 5forCNY.org. To request a copy of the 2022 Transfer of Wealth study, please feel free to contact Tom Griffith, vice president, development, at 315-883-5544 or TGriffith@cnycf.org.

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