Navigating the Generational Wealth Transfer
An Innovation Imperative
It’s happening: One of the greatest wealth transfers the world has ever seen. The impending shift of $84 trillion in wealth is not just a statistic; it’s a call for innovation and action in the estate planning and wealth management sectors.
In the United States, the population aged 65 and over is predicted to grow from 46 million to nearly 90 million by 2050. By 2030, one in five Americans is expected to be 65 or older. As boomers age, a financial cascade is on its way to millennials and Gen Z. This phenomenon represents not just a shift in wealth but a transformation in the stewardship of legacies — a reshaping of the financial frontier.
The Unpreparedness Dilemma
Despite the enormity of the upcoming wealth transfer, there are so many gaps. Here are just two: Estate Settlements and Home Trusts. Below, we profile two innovative startups reshaping these wealth-transfer frontiers.
REPORT AUTHORS
Laura Rippy
Managing Partner, Alumni Ventures Board MemberLaura is a leader of multiple funds at Alumni Ventures and serves on the Board. While at Alumni Ventures, she built Green D Ventures (Dartmouth-centric) to be the largest alumni fund at AV. In her expanded role, she now leads The Yard Ventures (Harvard-centric) and the Alumni Ventures Women's Fund. In 2024, her team will launch the U.S. Strategic Tech Fund. She was a three-time CEO, Board Member, and executive in many tech startups in Boston, Seattle, and DFW. She has previous experience at Microsoft across enterprise software and founding startup teams over seven years. Laura did strategy consulting in Germany during the economic unification of West and East Germany. Laura Rippy holds an MBA from Harvard Business School and an AB in Government from Dartmouth College.
Jason Stelmaszyk
Senior Advisor at GenTrustJason Stelmaszyk is a Senior Advisor at GenTrust who takes a high touch, client-centric approach to his relationships with a diverse base of founders, entrepreneurs, and financial principals representing a new generation of wealth in New York City. Prior to joining GenTrust Jason was an Executive Director at JPMorgan in the Private Bank. He spent over 10 years working with clients constructing portfolios and implementing trading strategies for sophisticated individual and institutional investors. His ability to create innovative bespoke investment ideas and his deep understanding of market dynamics have been instrumental to his success. Jason resides in Midtown Manhattan and enjoys running and cycling in Central Park.
Meet Alix
Until now, no one has had the audacity to touch estate settlement due to its complexity and the powerful human emotions involved…we’re here to change all that.
— Alexandra Mysoor, Co-Founder & CEO
A surprising 60% of Americans lack an estate plan. Why? The complexity of planning, cost, and an antiquated system that has not kept up with today’s “digital native” status quo. For planning estates, there are cases where we still rely on fax machines and printers all for a high-stakes process affecting millions of Americans. Meanwhile, administrative fees can reach $30,000 per estate and take up to two years for administrative clearance.
Transferring wealth between generations is one of the most important financial wellness endeavors families will ever undertake. It’s how we endeavor to make our love for, and protection of, our families outlast us. But that work is time consuming and burdensome, assuming they even know where to start.
— Hugh Tamassia, Co-Founder & CTO
The industry is service-heavy, with an almost negligible software footprint to streamline processes. This oversight opens a golden opportunity for innovative companies like Alix to modernize estate planning, leveraging technology to cut through the red tape and democratize access to efficient wealth transfer strategies.
Meet Dynasty
Unfortunately, only 18% of end-of-life plans are in the form of — or even include — a trust (compared to 75% in the form of a will). The miseducation of trusts (“reserved for the uber-wealthy”) and high upfront costs ($5K-25K initial setup) have long been deterrents for Americans, especially for the 22M households with a $1M+ net worth (Forbes).
The old way of creating and maintaining a Trust involves lawyers, notaries, 3-ring binders, and safe deposit boxes. Dynasty removes all this friction by making it possible to create a paperless and defensible Trust from your computer or smartphone in minutes.
— Alessandro Chesser, Co-Founder & CEO
The status quo is antiquated; again, paper, spreadsheets, and fax machines. This is where Dynasty comes in — a technology-driven, vertically integrated, and digitally native trust creation and management platform. Founded by three of the earliest employees at Carta, the company is bringing an existing process to a digital environment, similar to how Carta brought traditionally paper-based cap table management and fundraising documentation into the software-first environment.
The Technology Vanguard
Companies like Alix, Dynasty, and others could save families not only tens of thousands in fees but also the priceless commodity of time. Their tech-forward approach promises a renaissance in estate administration, potentially unlocking markets that traditional law firms have overlooked. By embracing technology, these companies can offer services to the vast middle market, making estate planning accessible to all, not just the affluent.
Public Policy: A Changing Dynamic With Tax Reform
With the Biden administration’s eye on tax reform, the future of income and capital gain taxes remains uncertain. While these specific proposals remain under scrutiny, others (like the lifetime gift exclusion) are set to automatically sunset at the end of 2025 without Congressional action. This leaves high-net-worth families with an ever-shortening window to make gifting decisions.
Considering various wealth strategies and investment structures to navigate potential changes while preserving their legacy should be integrated closely with next-gen, estate, and trust planning. Families are encouraged to explore tax-efficient options like loss harvesting, “in kind” donations, exchange funds, and qualified opportunity zones during their lifetimes to optimize their estates. Such tools can help raise the cost basis of assets, potentially minimizing the tax impact on appreciated investments with the goal of passing the most money to their heirs.
Planning with Purpose
We believe the ultimate goal of wealth transfer isn’t just about transferring assets. It’s about passing on values, sustaining family legacies, and ensuring that the wealth accumulated over a lifetime is preserved and used according to the benefactor’s wishes. Whether it be support for loved ones, philanthropic endeavors, or investment in future generations, the way wealth is transferred can reflect the life and values of the giver.
Passing along those values isn’t reserved for the very wealthy. A family can open a donor-advised fund to give money to charities at very low minimums. Not only can this be a great way to share values with the next generation, but it can be a powerful tool for tax purposes as well.
The Final Word: You Can’t Take It With You
As we navigate the complex tapestry of wealth transfer, we are reminded of the simple truth that we cannot take our wealth with us. The planning we do today is not for ourselves but for those we leave behind. By engaging with companies like Alix and GenTrust, individuals have the opportunity to see their wealth serves a purpose beyond their years, enabling a legacy that aligns with their values and intentions.
In this monumental wealth transfer, how we prepare now can dictate the financial health and well-being of future generations. It’s time to embrace the new tools and strategies that can turn a challenging transition into a seamless passage of stewardship.
Nothing in this communication is personalized advice of any nature. Alumni Ventures does not provide legal advice, and provides investment advice only to its affiliated funds. AV makes no representation or warranty regarding the claims made by third parties incorporated in this communication.
This communication is from Alumni Ventures, a for-profit venture capital company that is not affiliated with or endorsed by any school. It is not personalized advice, and AV only provides advice to its client funds. This communication is neither an offer to sell, nor a solicitation of an offer to purchase, any security. Such offers are made only pursuant to the formal offering documents for the fund(s) concerned, and describe significant risks and other material information that should be carefully considered before investing. For additional information, please see here. Venture capital investing involves substantial risk, including risk of loss of all capital invested. This communication includes forward-looking statements, generally consisting of any statement pertaining to any issue other than historical fact, including without limitation predictions, financial projections, the anticipated results of the execution of any plan or strategy, the expectation or belief of the speaker, or other events or circumstances to exist in the future. Forward-looking statements are not representations of actual fact, depend on certain assumptions that may not be realized, and are not guaranteed to occur. Any forward-looking statements included in this communication speak only as of the date of the communication. AV and its affiliates disclaim any obligation to update, amend, or alter such forward-looking statements, whether due to subsequent events, new information, or otherwise.