Our government has a money problem the Great Wealth Transfer could fix.
Over the next twenty years, more than $86 trillion will be transferred to spouses and next generations through the “Great Wealth Transfer” (GWT). The GWT is the most significant transfer of wealth to date and studies indicate that women will be the primary recipients of this wealth. Women not only outnumber men, but they also tend to live longer.
In the next six years, women are expected to manage at least $30 trillion of that wealth. This is historic, not only because this wealth offers women economic security, but it could reshape our economy and drive more resources to philanthropy – to bridge gaps in social safety nets, offer hope to marginalized communities, and promote greater equality.
But, the next 18 months could upend this story. Congress is gearing up for substantial changes to taxes on investments and estates and is considering new wealth taxes. That is because the tax relief in the 2017 Tax Cut and Jobs Act expires at the end of 2025. Congress must decide what should be extended, amended, or modified. That could get expensive. Lawmakers could tax some of the Great Wealth Transfer to help pay for those decisions, depending on the arguments and influence of advocates.
Lawmakers are also thinking ahead about longer-term crises, such as the yawning federal deficit and the looming bankruptcy of the Social Security and Medicare programs in the mid-2030s. As they move to tackle these issues in the next year, the risk to the Great Wealth Transfer will grow even greater.