Disparities in Wealth Transfer: Experiences and Expectations of Adults Ages 50-Plus

Wealth transfers, in the form of inheritances and financial gifts, can play a significant role in boosting the financial security of the individuals who receive them. According to the Survey of Consumer Finances, the average inheritance received by American households is roughly $46,000. However, the average inheritance varies greatly by income and race.

To leave an inheritance, it is critical to have a will that clearly states how you wish your assets to be distributed to your beneficiaries. Many experts agree that even people of modest means should have a will. Having a will has been deemed especially important for people who own property, including those whose main asset is their home, as well as people who hope to leave assets to loved ones who would not ordinarily be prioritized under the state’s inheritance laws. In light of the lower likelihood of Black adults and Hispanic adults to have wills, some researchers have also considered exploring the extent to which incentives to create wills may have an impact on the racial wealth gap over multiple generations.

In April 2024, AARP surveyed 1,869 adults ages 50-plus, including oversamples of Hispanic/Latino adults, Black adults, and Asian American, Native Hawaiian, and Pacific Islander adults, to uncover their expectations and experiences with inheritances and financial gifts and wills. We explored how the findings vary by factors such as income, race/ethnicity, and parental use of wills.

Despite near universal agreement on the importance of having a will, just half of adults ages 50+ currently have one.

More than nine in ten (93%) adults 50-plus say that it is important to them to have an updated legal document such as a will that explains who they would like to receive their assets after they die. However, just half (51%) of adults 50-plus say that they currently have a legal will, including 38% of adults 50–64 and 66% of adults 65-plus.

Among those who don’t have a will, “haven’t gotten around to it” is by far the most common reason (cited by 61%), followed by “don’t have enough assets to make it worth it” (21%), “don’t know how to get started” (19%), “don’t want to think about it” (16%), and “can’t afford to legally create a will” (15%).

Most adults expect to leave an inheritance even though many currently lack a will.

Over half (54%) of adults ages 50-plus expect to leave an inheritance that will substantively impact someone. Importantly, among those who expect to leave an inheritance, more than one in three (37%) do not yet have a will.

As might be expected, adults with higher household incomes and those who anticipate having more assets at the end of their life are more likely to expect to leave an inheritance than their counterparts with lower incomes and lower asset levels. In fact, over 70% of those with incomes of $100K or more as well as those who anticipate their end-of-life assets to exceed $100K expect to leave an inheritance. However, a noteworthy share (four in ten) of those with incomes under $30K expect to leave an inheritance. Expectations of leaving an inheritance also vary by age, with those ages 65-plus more likely than those ages 50–64 to anticipate doing this.

A minority have either already received an inheritance or financial gift or expect to receive one in the future, with non-Hispanic white adults among those especially likely to say both.

One in three (34%) adults ages 50-plus have either already received an inheritance or financial gift that substantively impacted their financial situation (24%) or expect to receive one in the future (15%).

Certain segments of the population are much more likely than others to report having already received a substantive inheritance or financial gift. These segments include but are not limited to adults 65-plus (28%, vs. 20% of those 50–64) and those with household incomes of $30,000 or more (27%, vs. 12% of those with incomes under $30,000).

Notably, compared to Black adults (10%) and Hispanic adults (14%), white, non-Hispanic adults (28%) are more likely to have already received a substantive inheritance or financial gift. White, non-Hispanic adults (16%) are also more likely than Black adults (10%) to expect to receive such a transfer in the future. Other segments that are especially likely to expect to be the beneficiary of a transfer in the future include: adults 50–64, those whose parents have a will, and those who expect to have more assets at the end of their life.

Many have not designated beneficiaries for all of their financial accounts.

Besides having a will, another way to pass down wealth is to designate beneficiaries for your financial accounts. Nearly all (91%) adults ages 50-plus say that they have at least one type of financial account such as a checking account, savings account, retirement account, or other type of financial account. However, of those who have such accounts, just 65% have designated a beneficiary for all of them.

Some adults, especially Black adults and adults with lower incomes, may be passing down debt to the next generation.

While most adults ages 50-plus expect to have no debt by the end of their life, just over one in ten (13%) expect to never fully pay off their debt. Black adults (21%) are especially likely to feel that they will never pay off their debt, compared to just 13% of white adults, 12% of Hispanic adults, and 9% of Asian American, Native Hawaiian, and Pacific Islander adults. The anticipation of never paying off debt also varies by household income, with those whose incomes are under $60,000 (17%) more likely to feel this way than those whose incomes exceed $100,000 (10%).

Implications

Wills are an important vehicle to help ensure that wealth transfers are carried out according to the wishes and expectations of the deceased. However, this research suggests that many people do not have wills in place, including many of those who say that they expect to leave inheritances. While wills do not directly address systemic issues of wealth disparities in the United States, they represent an important wealth transfer tool for all households to keep in mind. Nearly all adults ages 50-plus in our survey expect to have at least some assets remaining at the end of their lives. The lower use of wills by lower-income households and Black and Hispanic households poses a risk that their assets may not be distributed to their loved ones as they had expected. A home is an important asset that the majority of adults 50-plus have, regardless of race/ethnicity. Having a will can help ensure that the home as well as other assets are transferred according to the benefactor’s wishes.

These findings suggest the need for more education about the importance of wills for all adults, regardless of income and asset level, as well as the need to update beneficiaries on financial accounts, and increase access to low-cost will preparation services from trusted and reputable providers. Employers and community organizations may be useful channels for delivering education and low-cost services. Offering information about wills around the time of important life transitions such as marriage, the birth of a child, health changes, and retirement may also be effective.

The following resources may be useful to those interested in learning more about preparing a will and getting finances in order:
• 10 Facts You Need to Know for Writing Your Will
• Will Your Assets Really Go to Your Heirs?
• What Happens to Your Debts After You Die?

The following resources may be useful to those interested in learning more about wealth disparities by race:
• Black Wealth Is Increasing, but so Is the Racial Wealth Gap
• Wealth Surged in the Pandemic, but Debt Endures for Poorer Black and Hispanic Families
• Intergenerational Wealth Transfers: Do Expectations of Leaving an Inheritance Differ Between Black and White Families?
• Wills, Wealth, and Race

Methodology
Interviews were conducted from April 11, 2024 through April 16, 2024 using the Foresight 50+ Omnibus. The final sample included 1,869 U.S. adults 50-plus across the 50 states and the District of Columbia, including a total of 370 Black and African American adults, 389 Hispanic and Latino adults, and 400 Asian American, Native Hawaiian, and Pacific Islander adults. Interviews were completed in English and Spanish.

Funded and operated by NORC at the University of Chicago, Foresight 50+ is a probability-based panel designed to be representative of the U.S. household population age 50 or older. Interviews were conducted online and via phone. All data are weighted by age, sex, education, race/ethnicity, region, and AARP membership.

For more information, contact S. Kathi Brown of AARP Research at skbrown@aarp.org. Media inquiries should be directed to media@aarp.org.