Gen X, Millennials Set to Inherit Trillions in Real Estate

Takeaways

• The largest transfer of wealth in history is underway, as baby boomers start to pass down trillions of dollars in assets, including about $4.6 trillion in real estate, to members of Generation X and millennials.
• Wealthy families are buying homes for their adult children now as a way to lower taxes later, protect their assets, and help their loved ones remain financially stable.
• When inheriting property, heirs have tough choices: keep it, sell it for cash and investment freedom, or use smart financial strategies to manage the asset and cut down on taxes.
• For heirs who keep inherited property, sophisticated legal and financial planning — like using trusts or strategic selling — is key to managing the asset, preserving wealth, and minimizing taxes.

Over the past several decades, baby boomers and their parents have amassed a considerable amount of wealth. That wealth is now beginning to pass to Generation X and millennials.

According to a new report, about 1.2 million individuals, each with at least $5 million in net worth, will pass down more than $38 trillion over the next 10 years. About $4.6 trillion of this wealth is estimated to be in the form of real estate, with about $2.4 trillion of it located in the United States.

How This Real Estate Transfer Is Reshaping the Market

Historically, real estate has been one of the primary stores of wealth for older generations, particularly for baby boomers who purchased homes during periods of relative affordability and mortgage stability. As these owners age and pass on their assets, younger generations stand to inherit properties that are worth many times more than their original purchase price.

This collective transfer of real estate will influence both luxury and mainstream property markets and could consolidate wealth in prime locations as heirs choose to keep, upgrade, or sell inherited properties.

Wealthy Parents Are Buying Homes for Their Adult Children

One striking phenomenon accompanying this transfer of wealth is that many affluent parents aren’t waiting for traditional inheritance timelines. They’re purchasing properties now for their adult children. Reasons for this include the following:

• Early wealth transfer as financial strategy. Parents may buy real estate now to make the most of current market conditions, secure desirable locations, or minimize future tax exposure. Buying property during heirs’ younger years allows parents to guide the choice of asset, often structuring ownership through trusts, limited liability companies (LLCs), or family offices to simplify future transfers.
• Lifestyle and family cohesion. Some families use this strategy to bring their children and grandchildren closer geographically or to help launch them into financial stability, particularly in high-cost markets where younger adults struggle to afford housing of their own.
• A hedge against market volatility. Buying now may insulate the next generation from future price increases or interest rate uncertainty, allowing families to secure homeownership before prices rise further.

Affluent Families Are Having Inheritance Conversations Earlier

In addition to transferring wealth, affluent aging parents are imparting knowledge and a sense of financial responsibility to their heirs. Across wealth management circles, there’s a growing emphasis on proactive and transparent estate planning. A few factors are contributing to this trend.

• Changing attitudes toward wealth and family dynamics. Older generations increasingly view earlier discussions about inheritance as beneficial, helping avoid confusion or sibling disputes after a death.
• Complexity of modern portfolios. With diversified holdings that often include trusts, multiple properties, and business interests, families find it helpful to educate heirs ahead of time so they can make informed decisions once they inherit.
• Tax and legal planning. Proactive planning can include lifetime gifts, trust arrangements, or sales at favorable valuations — all strategies that may help reduce estate taxes or take advantage of current tax provisions.

Family meetings, legal discussions, and phased transfers of assets can also help families manage large estates.

Structuring Wealth to Preserve Value

Wealthy families often use sophisticated legal and financial tools to preserve real estate value and reduce tax exposure.

• Trusts. Trusts allow families to transfer property without the delays and costs of probate.
• Family Limited Partnerships (FLPs) and LLCs. Placing properties into LLCs or FLPs can help limit estate tax exposure and protect assets from creditors.
• Annual gifting and step-up in basis. Gifts made before death can reduce the taxable estate, while a step-up in basis upon inheritance may reduce capital gains taxes if heirs sell later.
• Charitable Trusts and Foundations. Some families donate property to charitable trusts or foundations as part of philanthropic goals while enjoying tax advantages.

Such planning is typically coordinated by estate planning attorneys, accountants, and wealth advisors to ensure legal compliance and tax efficiency.

Why Some Heirs Choose to Sell Inherited Real Estate

Despite the value of these assets, not all Gen Xers and millennials keep the homes they inherit. Several factors explain why:

• Practicality over legacy. Large legacy properties, especially those requiring significant maintenance or rising property taxes, can be burdensome. Some heirs sell to simplify their financial lives or invest in properties that better fit their lifestyles.
• Geographic or career factors. Younger generations often live, work, or raise families far from inherited estates. Selling allows them to reinvest closer to home or in markets more aligned with their priorities.
• Market opportunities. When real estate valuations are high, heirs may take advantage of favorable selling conditions to convert property into cash or diversify their portfolios.
• Financial flexibility. Instead of holding onto a single large property, some heirs sell and allocate proceeds into other investments, retirement savings, or business ventures tailored to their own long-term goals.

So, while affluent parents from the baby boom may have sought to establish a permanent family property for their loved ones, their adult children may value flexibility and liquidity more. As the report puts it, “While older generations may lay the foundation for their legacy, it’s the heirs who ultimately shape where it goes next.”

The New Face of Legacy

The inheritance of trillions of dollars in real estate by Gen Xers and millennials is as much a cultural phenomenon as it is a financial one. As previous generations transition wealth to their children, the ripple effects will influence everything from urban development to geographic migration for years to come.

The Great Wealth Transfer ensures that while the foundation was laid by the boomers, it is Gen X and millennials who will define the future of the American home.

Additional Reading

For additional reading on topics related to estate planning and wealth management, check out the following articles:

• Lower Your Heirs’ Tax Burden While Legally Avoiding Taxes
• Financial Planning: High-Net-Worth Wealth Transfer to Heirs
• The Great Wealth Transfer: Managing Your Inheritance Wisely
• A Creative Way to Craft Your Estate Planning Legacy