What is Wealth Transfer?

Tara Barnett

Wealth transfer is a term used to describe the transfer of money from one individual to others, typically after or in anticipation of the death of the person whose wealth is being distributed. Many people with significant funds start planning for wealth transfer long before death, because distributing wealth is often subject to complex taxes that can be avoided by starting early. People without many financial assets should still look into some form of planning to distribute wealth upon death. The best way to efficiently and correctly plan for wealth transfer is to meet with a professional in the relevant field who can assess the total of one's assets and come up with a strategy that adequately releases those assets into the hands of others.

People without many financial assets should still look into some form of planning to distribute wealth upon death.
People without many financial assets should still look into some form of planning to distribute wealth upon death.

A variety of financial institutions are available to facilitate wealth transfer, but a good place to start is working with a financial adviser. When looking into wealth transfer, there may be a number of confusing terms, and it may be difficult to get started or even understand what is being offered. In the very least, a financial adviser and an attorney will likely be required for creating legal and operational plans for wealth transfer.

Some people choose to take care of significant amounts of giving prior to death. Distributing wealth by paying for the education of descendents, paying for medical care, or a number of other monetary giving strategies can reduce the amount of wealth lost to taxes. Just because money is transferred between spouses or to descendents does not necessarily make it free from taxation, but there are ways to strategically plan giving to minimize the amount of taxes paid. Laws on estate or inheritance taxes vary by region and should be investigated thoroughly to avoid legal trouble.

Many people give money and other assets not only to family and friends but also to institutions. It is possible to distribute wealth to charitable foundations, schools, and other groups. Often, gifts to schools and libraries can be restricted such that the money can only be used in a particular way. In many cases, giving a gift in this manner results in social recognition, so some people choose to give these gifts prior to death.

Wealth transfer is not only about giving away money one has in bank accounts. Beneficiaries from life insurance, retirement plans, and other assets also receive money that must be planned for. One can designate in a will to whom items like houses, cars, and material possessions will go. The entirety of what makes up a person's wealth should be accounted for prior to death.

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Discussion Comments


@ZipLine-- Not at all. The owner of the wealth decides what they want to do with it and they may distribute it however they like.

I think in some cases, family members can file a case about the way the wealth was transferred. But individuals are free to make their wills as they like.


I actually think that making a will before death for wealth transfer can be a bad idea. Planning is good but some people don't distribute their wealth equally to their children. Our great uncle for example, never really liked any family members and gave all his wealth to charity. Another relative become upset with one of her children a short time before her death and changed her will so that the son wouldn't get anything.

I personally think that inheritance is a right and it should be divided equally between children.


My grandmother is planning her wealth transfer right now. She does have an adviser and I think she was advised to distribute some of her wealth before she died to avoid too many taxes. Just as the article has mentioned. So she is actually paying for my college. I was very surprised to hear it because even my parents haven't been able to cover my college tuition. I have been taking student loans.

My grandmother said that her wealth will be left to my parents and eventually me anyway and she'd rather help me pay for college rather than have me take loans and try to pay them later. I am very grateful. I know that not everyone has this opportunity. If there are others out there wondering how to distribute wealth, do think of your children's and grandchildren's education. I think it's one of the best investments one can make, especially considering how expensive college is these days.

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