Inheritance of Trillions of Dollars by Women: The Great 'Horizontal Wealth Transfer'

• A report predicts that up to $9 trillion will be inherited by spouses and partners in the near future, which is being referred to as "the horizontal wealth transfer."
• Over 43 million individuals in the Americas are aged 75 and above, with a combined wealth of over $50 trillion that can be transferred.
• Nearly double the share of women in the world's millionaires has been achieved, according to Julius Baer.

A report predicts that up to $9 trillion will be inherited by spouses and partners in the near future, which is being referred to as "the horizontal wealth transfer."

In the coming decades, it is predicted that aging baby boomers and older generations will transfer approximately $84 trillion in wealth to charitable organizations and family members. The majority of this inheritance is expected to go to younger generations, specifically Generation X, millennials, and Generation Z.

In the future, inheritances will mostly be given to women due to the fact that surviving spouses and partners usually receive the initial bequests, and women tend to outlive men, according to the UBS Global Wealth Report.

According to the report, an estimated $9 trillion will be transferred "intergenerationally" between spouses.

The report stated that the inheriting spouse typically holds onto wealth for an average of four years before passing it on, as life expectancy varies between men and women and couples often have an age gap.

The "horizontal wealth transfer" refers to the movement of wealth within a generation rather than between generations. This phenomenon, often overlooked, has the potential to alter the wealth management, investing, and luxury spending landscape, which has traditionally been dominated by men.

"According to Paul Donovan, chief economist of UBS Global Wealth Management, most people believe that wealth is passed down through generations. However, approximately 10% of wealth is likely to be distributed to spouses or partners rather than children, although this may change over time."

The largest horizontal wealth transfers will occur in the Americas, with over 43 million people aged 75 and over $50 trillion in transferrable wealth, according to the report. The average age of those passing down wealth is over 85.

Inheritances can be a two-step process, with property first going to the surviving spouse and then being passed down to the next generation. Estate law typically allows the surviving spouse to inherit unlimited value without being subject to estate tax.

After $9 trillion is distributed to spouses, they will pass on over $8.4 trillion to future generations, making them crucial figures in the wealth transfer.

The increase in women's incomes and wealth, as well as inheritances for both older and younger inheritors, is leading to an increase in the share of high net-worth investors and consumers among women.

Nearly double the share of women in the world's millionaires has been achieved, according to Julius Baer.

UBS's wealth management has seen a significant shift with 45% of its clients being women, according to Donovan.

"He stated that wealth management clients are likely to be diverse individuals with varying perspectives and goals for their wealth."

By 2030, women are predicted to manage the majority of the $30 trillion in baby boomer wealth, according to a McKinsey report. Despite the traditional dominance of male clients and advisors in the wealth management industry (with 85% of advisors being male), McKinsey stated that this trend is rapidly changing.

"Women are set to become the main focus, following years of being overshadowed by men."

According to McKinsey, there has been a 30% increase in married women making financial and investment decisions, and more women than ever are the family breadwinners, resulting in growth in their investible assets.

Women's watches are one of the fastest growing segments in the luxury watch market, and Jean-Christophe Babin, CEO of Bulgari, believes that the trend is towards more feminine and unisex watches as women gain more power in terms of independence, autonomy, and purchasing power.

The horizontal wealth transfer could also benefit philanthropy. In 2020, giving to women and girls-focused groups increased by 9% to over $8 billion, as measured by the Women's Philanthropy Institute at the Lilly Family School of Philanthropy.

Melinda French Gates has committed $1 billion to women's and girls' causes, while MacKenzie Scott has given away more than $17 billion of her fortune since 2019, including substantial grants to the Girl Scouts of the USA.

"Donovan stated that there will be a significant shift in wealth ownership, which will have a considerable impact on who controls the resources that fund the global economy."