The ultra-rich are wealthier than any mere mortal could ever imagine and a look at how much wealth they are expected to pass on to the next generation until 2030 drives home this point once more. Around 60% of the total pre-tax wealth expected to be handed down in this time frame will come from North America. Due to favorable inheritance tax codes, U.S. heirs will be able to keep more of this wealth than if they lived elsewhere, further contributing to the accumulation of wealth among America’s richest.
A report by Wealth X defines people with a net worth of $5 million to $30 million as high-net worth individuals, while those with $30 million or more to their name are labeled of ultra-high net worth. But it’s an even more exclusive subset of these UHNWI, people with $100 million or more in net worth, that plays an outsized part in inter-generational wealth transfers in the U.S. and around the world.
This chart shows the cumulative expected wealth transfers until 2030, by world region and wealth … [+] tier.
Despite their smaller number, ultra-ultra-high-net-worthers are responsible for upwards of 60% of expected wealth transfers in Europe and Asia. On both continents, the number of those who have $100 million or more in net worth and are expected to pass it on soon is only around 4-5% of the millionaires and billionaires examined for the study. The picture is a little different in North America, where only 2.7 percent of the study’s millionaire and billionaires sit at the very top of the food chain but will still be responsible for 38% of passed-on wealth on the continent by 2030.
The size of inter-generational wealth transfers in the study is given on a pre-tax basis. Therefore, the cut paid to the government will vary from country to country. U.S. heirs can expect to keep a bigger share as a flat tax rate of 40%, high exemption thresholds and the favorable treatment of both family and non-family recipients allow for many heirs to keep 100% of their inherited wealth.
No change on the horizon
As a result, U.S. inheritance, estate and gift tax revenues are just slightly above the OECD average despite the concentration of wealth in the country. In contrast, many European countries start inheritance taxation at much lower sums than the U.S. but also at lower rates, increasing them progressively as estate sizes grow.
Major changes to the U.S. system are not on the horizon under the Biden administration. The “Build Back Better” social infrastructure plan had called for a halving of the current gift and inheritance exemption from $11.7 million back down to roughly $6 million per single heir in addition to closing loopholes for avoiding the gift tax, according to CNBC. With unfavorable majority shares in the Senate, however, the plan remains on ice. The $6 million tax exemption would still be multiple times that of the next highest in the OECD—Italy at $1.1 million.

Charted by Statista

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