Women Will Get Most of the Wealth? Wealth Transfer to Spouses and Partners

Over the next 20 to 30 years, older people will give $84 trillion to charities and family members. Younger generations like Generation X, millennials, and Generation Z will get most of this money. In the coming years, up to $9 trillion will be given to spouses and partners. This event is called the “horizontal wealth transfer.”

Women Will Get Most of the Wealth?

Since surviving spouses usually get the first inheritances and women live longer than men, most of this money will go to women, says the UBS Global Wealth Report. Money Transferred Between Spouses. About $9 trillion will be passed between spouses.

Couples’ Age Differences Affect Wealth Transfer

“Life expectancy varies between men and women, and couples often have an age gap. The inheriting spouse usually holds onto this wealth for about four years before passing it on,” the report said. UBS calls this the “horizontal wealth transfer.” This wealth transfer could change the wealth management, investing, and luxury spending landscape, which men have largely dominated.

Wealth Going Sideways

“Most people think of wealth going down through generations,” said Paul Donovan, chief economist of UBS Global Wealth Management. “But about 10% of it goes sideways, to spouses or partners, before eventually going to children.”

Largest Wealth Transfers in the Americas

The biggest horizontal wealth transfers will happen in the Americas, where over 43 million people over the age of 75 hold over $50 trillion in transferable wealth. The average age of those passing down wealth is over 85.

Two-Step Process

Some families may pass fortunes directly to the next generation, but often inheritances go first to the surviving spouse, then from that spouse to the next generation. (Estate law usually allows the surviving spouse to inherit property of unlimited value without estate tax.)

The “Feminization of Wealth”

These transfers, along with other economic factors, contribute to the “feminization of wealth.” As women’s incomes and wealth rise, along with inheritances for both older and younger women, analysts expect women will make up a growing share of high-net-worth investors and consumers.

More Women Millionaires

Women now make up over 11% of the world’s millionaires, nearly double the share in 2016, according to Julius Baer. This will have a big impact on wealth management. Donovan said 45% of UBS’s wealth clients are now women.

Wealth Management

“This matters for wealth management,” he said. Clients will likely be “different people, with different ideas and different plans for their wealth.”

A McKinsey report estimated that women will control most of the $30 trillion in baby boomer wealth by 2030. While the wealth management industry has been traditionally dominated by male clients and advisors (85% of the latter group), McKinsey said that’s changing fast.

Women Leading Financial Decisions

“After years of being secondary to men,” the report said, “women are set to take the lead.”

Compared to five years ago, 30% more married women are making financial and investment decisions, and more women than ever are the family breadwinners, increasing their investable assets.

Luxury brands traditionally geared toward men are also adapting. In the luxury watch market, women’s watches are one of the fastest-growing segments. Jean-Christophe Babin, CEO of Bulgari, said, “The trend is toward more feminine and unisex watches. Women have increasing independence, autonomy, and purchasing power. We believe that will continue.”

Philanthropy could also benefit from the horizontal wealth transfer. Giving to groups focused on women and girls grew 9% in 2020 to over $8 billion, according to the Women’s Philanthropy Institute at the Lilly Family School of Philanthropy.

Melinda French Gates recently pledged $1 billion to women’s and girls’ causes, and MacKenzie Scott has given away over $17 billion since 2019, including large grants to Girl Scouts of the USA.

Significant Shift in Wealth Ownership

“We will see a dramatic shift in wealth ownership,” Donovan said. “It will be significant in determining who controls the resources that finance the global economy.”

special thanks to : CNBC