BFFs? A Third of Gen Z Intends to Leave Inheritance to Friends

We need to start making more friends.

Inheritance is often passed down to children and grandchildren. But Gen Z likes to buck trends. While about half of the young folks of today expect to leave something behind for kids and grandkids, roughly a third intend to pass inheritance on to their best buds, according to a Northwestern Mutual survey. 

Gen Z’s plans may be a little out of the ordinary, but it’s a reminder to advisors that not every client will have the same goals and deciding what they want their financial legacy to be is a lifelong process. “As people grow older, sometimes, their relationships change and their priorities evolve,” said Aaron Channing, partner at Fortivus Wealth Group, part of Northwestern Mutual. He noted that only 5% of boomers intend to leave inheritance to their friends, while the majority will give it to family. 

Strapped for Cash

The oldest Gen Zers and Millennials are 28 and 44, respectively, so finalized estate plans are decades away. Before they get to leaving something behind, however, younger cohorts are thinking about what they might be receiving in the coming years. Let’s just say it’s a little nerve wracking:

• Nearly a third of US adults plan to leave a financial gift, up from a fourth last year, the survey found. However, only a fifth expect to receive one, down from 25% in 2024.
• Plus, the majority of folks set to receive an inheritance say it is “critical” or “highly critical” to their long term financial security. 

“Financial anxiety is an epidemic across the country right now,” Channing said. “We are typically supporting our clients with their estate planning goals, but we don’t always get to see how impactful an inheritance can be to the next generation.”

Family Meeting. That anxiety could lessen as many families are beginning to have the talk. Some 60% of Americans who expect to leave an inheritance say they have had a conversation with their family about their plans. It can be awkward and uncomfortable, but Channing recommends avoiding a one-and-done talk, and instead have clients, their children and advisors have the conversation over multiple meetings. Otherwise, you end up with a lot of gaps and confusion.

“The lack of a plan is still a plan,” he said. “It’s just not a very good one.”