Affluent Are Well-Versed In Passing Wealth Along

Over the next 20 years, the United States will see the largest transfer of wealth in its history - almost $5 trillion will be passed on to the next generation. And the wealthiest Americans are well prepared, according to the latest US Trust Survey of Affluent Americans released March 15.

The survey, which covers a cross section of the top 1 percent of wealthiest people in the country - two-thirds with estates between $1 million and $10 million - found that most already have a will (84 percent), as well as a formal estate plan (70 percent), and have discussed the plan with their spouse (89 percent).

``The fact that the most affluent in our society make extensive preparations for the disposition of their estates is a good lesson for anyone,'' says Jeffrey Maurer, president of New York-based US Trust Corporation. The survey found that investment securities comprised the largest portion (49 percent) of respondents' estates. Investment in real estate (20 percent) and personal residences (12 percent) accounted for the next largest portions.

The survey also revealed that most of the wealthy underestimate the rate at which their estates will be taxed. Most cited ``an average of 24 percent,'' Mr. Maurer says, ``while in reality the range is more likely to be 37 percent to 55 percent.''

While 75 percent of the wealthy said ``it is a good idea to talk with children about inheritances,'' only 34 percent had done so. On average, respondents said 23 years old was the youngest an individual should be ``before they could be entrusted with a significant inheritance.'' Also, $5.5 million was the most money an individual could inherit, they said, without having ``a detrimental effect on the values of that person.''

Most parents (84 percent) plan to treat their children on a ``totally equal basis,'' but certain circumstances might mitigate equality, they said. These include:

* a child's mental health (75 percent)

* physical health (70 percent)

* ability to manage money wisely (54 percent)

* and inability to get and keep a good job (52 percent)

Half the respondents said they would also leave part of their estates to charities. A majority (58 percent) named academic institutions as beneficiaries; 45 percent named health-related organizations; 34 percent mentioned religious organizations.