US Business Owners Come Up Trumps On Wealth Transfer Planning - Data

Josh O'Neill

19 May 2017

Of all the demographic groups in the US, business owners are best prepared for the $3.2 trillion wealth transfer set to occur over the coming years, new data shows.

US-based business owners are “readying themselves and the next generation” for wealth transfer, according to new research from Royal Bank of Canada Wealth Management.

The study by Canada's largest lender and Scorpio Partnership found that 39 per cent of business owners had a “comprehensive” wealth transfer plan in place compared with 26 per cent of employed professionals.

Business owners with more than $10 million of investible assets are three times more likely to have a full wealth transfer plan in place than those with $1 million or less, the study shows.

“In the case of business owners and wealth transfer, complexity drives necessity of planning,” said Van Pate, wealth strategies consultant at RBC Wealth Management, US. “A business owner’s assets are often illiquid and inextricably linked to family interests, creating a host of wealth planning challenges that employed professionals do not face.”

Business owners tend to adopt the same strategies in wealth transfer that have brought them success in their business lives, RBC Wealth Management says.

According to the study, 51 per cent have drafted a will. Research also shows that business owners are “very concerned” about providing their children with knowledge of business and finance, and almost half, or 45 per cent, intend to better prepare their children for inheritance.

The study also highlights how business owners are more likely to transfer some of their assets during their lifetime, with 40 per cent indicating that they intend to make lifetime transfers to their heirs, compared with 32 per cent of employed professionals.