Americans have roughly $154 trillion in assets, according to the Federal Reserve. As of the most recent estimates in 2024, Baby Boomers (those born roughly between 1946 and 1964) hold approximately $78.55 trillion in wealth, which accounts for a little more than 50% of all household wealth in the U.S.. This wealth is significantly larger than the total net worth by other generations, including Generation X and Millennials.
Generational wealth comes in many forms, including equities and mutual funds, private businesses, real estate, durable goods, pensions and more. But with such a large percentage of all U.S. assets belonging to one generation, the issue becomes how to best efficiently transfer that wealth to future generations.
Real Estate is one way for Baby Boomers to use their wealth strategically to help family members, especially younger generations, enter the increasingly unaffordable real estate market. This can be a meaningful way to provide support now, while potentially creating long-term financial stability for their children or grandchildren.
Possible Wealth Transfer Strategies Using Real Estate - Baby Boomers can purchase real estate for family members
Buy a Home Outright and Gift It
- Simplest method: purchase the home in full and transfer title to the family member
- Use part of the lifetime gift tax exemption
- Could also structure it as a partial gift and partial loan to manage tax exposure
Provide the Down Payment - Gift a down payment
- Helps children qualify for a mortgage, while preserving some financial independence
Co-Sign or Co-Buy Property
- Co-signing a mortgage or co-owning property with a child/grandchild can help them qualify
- Baby Boomers can retain an ownership interest, share equity growth, or provide use without
full transfer
Use a Trust of LLC to Buy Property
- Purchase property in a revocable or irrevocable trust to retain control and guide
future ownership
- Or form a family LLC to manage the property jointly while gifting shares over time
- Offers asset protection, estate planning benefits and potential tax advantages
Buy Multi-Generational or Income Producing Property - (Rental Properties)
- Invest in duplexes or multi-family homes where the younger generation live in one unit
- Creates housing and potentially generates rental income
- May qualify as a strategic investment, not just a gift
Offer Intra-Family Loans
- Lend money at the IRS approved minimum interest rate, often lower than banks
- Allows family to buy property while repaying on favorable terms
- Must be documented properly to avoid IRS scrutiny and maintain estate integrity
Shared Equity Agreements
- Baby Boomers contribute to purchase in exchange for a share of future appreciation
- Agreements can define ownership, repayment terms and exit strategy
- Useful wen adult children can pay a mortgage, but not the full down payment
Include Real Estate in an Estate Plan
- Buy now and earmark specific properties for transfer to children or grandchildren
through a will or trust. Helps avoid probate and ensure real estate stays in the family
Legal, Tax and Financial Considerations
Purchasing real estate to transfer wealth may be a good strategy for you and your family. While
Baby Boomers currently have the highest concentration of transferable wealth, purchasing real
estate can offer asset protection, estate planning and tax advantages for all age groups. Each
strategy has specific requirements and structures to properly create and execute the desired plan.
Each also has different legal and tax implications. You will want to consider the pros and cons of
each strategy, to ensure what strategy is best for your family estate plan.
This blog article is not meant to give legal or tax advice. It is meant to provide a possible
alternative option for how to transfer wealth. Co-owning property can be a great way to support
family or invest jointly, especially between generations. Purchasing real estate can offer financial
and estate planning benefits, but it also comes with important tax implications. Any tax
advantages will depend on how the property is titled, who contributes financially and what is the
intent of ownership. Discuss with a tax advisor for the tax benefits and considerations.
It is highly recommended that you consult with a real estate attorney, financial consultant and
tax advisor to ensure you correctly structure your estate plan, and that it fits your over-all estate
strategy, tax situation and long-term goals. You will also want to discuss the plans openly with
family to avoid misunderstandings or conflicts.
Once you have consulted with the appropriate professionals to decide and develop your estate
plan utilizing real estate, work with a realtor to find the right property to execute and fulfill
your strategy.
For any questions on purchasing or financing real estate, contact one of Maxim Properties'
realtors and real estate consultants.
