Mary Curtis is getting ready to give it all away.
Five decades of hard work as a doctor, five decades of owning homes that were bought cheap and sold expensive, five decades of saving money so that now the nest egg is measured in the hundreds of thousands of dollars.
Her two children and two grandchildren already have been showered with gifts. Down payments have been made on houses. Two generations of college tuitions have been footed. Trips have been bankrolled to Australia, Hawaii and Japan.
Yet there is still more than $600,000 left. And now, at 75, Curtis is planning to ensure that most of it will go to her offspring when she is gone. (Not wishing to detail her finances in public or embarrass her children, she insisted that her real name not be used.)
The windfall that will come to her children is part of an intensely private, little-discussed, but vast transfer of wealth that is beginning to take place across the nation. Inheritances have been handed down for centuries, but never in the numbers and huge sums being handed down today.
The remarkable wealth accumulated by the post-World War II generation of working Americans is by far the biggest nut - the biggest pot of privately held money, stock, real estate and every other form of private wealth - that the world has ever seen.
An economist has estimated that Americans over 50 hold assets worth $8 trillion. That is $8,000,000,000,000. Put another way, a trillion is a thousand billion. A billion is a thousand million.
"There is no doubt that we will soon be seeing the largest transfer of income in the history of the world," said economist Robert Avery of Cornell University, who has been studying the phenomenon and is the author of the $8 trillion estimate.
"The passing of the extraordinary wealth created in America in the past five decades will speed up in the 1990s, as those alive and working during those years reach their 70s and 80s," he said.
By all accounts, their children and grandchildren will need all the help they can get.
"If it weren't for gifts and inheritances, most baby-boomers would never be able to accumulate any real wealth," said Edward N. Wolff, a New York University economist who is studying national inheritance patterns. "Their wealth is clearly declining, while the wealth of elderly households has been increasing for some time."
"Life has been very good to me," said Curtis, who now lives beside a wooded pond in Chester County's Hershey's Mill Village adult community. "My generation was the fortunate one: We started out with nothing, but things kept going up and up. . . . it never stopped."
"It won't ever be like that again," she has concluded. "So I want to help make it as good for my children and grandchildren as I can."
What does the older generation have? It remains a strong taboo in most
families to discuss the family assets, and so potential inheritors often are unaware of what might be coming.
Consider these numbers:
* The average net worth of a couple 65 years and older is about $200,000, according to the Federal Reserve Board's Survey of Consumer Finances. This includes houses, savings, stock and all other assets (minus debt), but not Social Security or pension payments.
* Older Americans are accumulating wealth faster than any other age group. The median net worth for those over 65 jumped a hearty 25 percent from 1984 to 1988, says the U.S. Census Bureau. At the same time, the median net worth of those ages 35 to 54 actually declined.
* That $8 trillion estimate of personal net worth of Americans over 50 years represents roughly as much wealth as existed in private hands for all Americans in 1979, the Federal Reserve also reports.
This certainly does not mean that all older people are wealthy. One- quarter of those over 65 today have incomes below or not far from the poverty line, and just 1 percent of the elderly control almost 30 percent of the group's wealth.
But because the whole pie has gotten so big, the wealth of people like Curtis is no longer exceptional.
Philadelphia estate lawyer Steven Feldman says his clients are primarily middle class - retired teachers, librarians, and engineers - and other professionals. Their assets, he said, typically range from $200,000 to $500,000.
Curtis' estate, for instance, is likely to exceed the $600,000 federal estate-tax exemption, which means that some federal estate tax will have to be paid.
But Curtis does not want her children to be stuck with any of those costs, and so she has made yet another arrangement: Her life insurance policy has been expanded and rearranged to cover all estate taxes at her death.
Much of the wealth held by older Americans - almost half of that $8 trillion - is in real estate. More than two-thirds of all Americans over 65 own their homes, and that real estate has grown in value faster over the last few decades than almost any other investment.
An additional 16 percent is in stocks and bonds, which older people hold far more commonly than younger Americans.
Medicare, Social Security, government and private payments - all of these programs will continue protecting and enhancing the wealth of older Americans in a way that has never happened to any other other generation. When Congress agreed in 1981 to raise the federal estate tax exemption gradually - from $175,000 to $600,000 by 1987 - it was a recognition that people were
accumulating wealth as never before.
For many children and grandchildren, money is there for the asking.
Arthur and Mary Nash also live in Hershey's Mill Village, and they, too, have a few resources between them. Arthur Nash is 86 and worked more than four decades as a bank manager. His wife Mary, 79, did well as a real estate broker for many years.
Their children are quite comfortable, but they have one grandson who is
finding it difficult to get started. He is planning to get married soon, and his grandparents wonder if he will need some help buying a home.
"If he needs help, we are there," said Arthur Nash, proudly. "All he has to do is ask."
But which baby-boomers get the money, and how much they get, will often be both unpredictable and seemingly unfair.
Unpredictable because long-term illness and poor estate planning can still deplete the holdings of many potential givers of inheritance.
Unfair because the distribution of America's wealth is just as lopsided in death as it is in life.
White Americans, on average, hold assets five times greater than African- Americans, and nearly three times greater than Hispanics. About 62 percent of privately held wealth is owned by 10 percent of the nation's households. This concentration of wealth actually has increased during the last 10 years, though it is still significantly more evenly spread than in the first half of the century.
But these trends cannot distract from this overarching fact: Inheritance has been greatly democratized, and a vastly larger group of older Americans than ever before will have wealth to pass on.
Sometimes, even their families are surprised.
*
Call them Chris Ford and Madeline Talbot. Husband and wife, they were getting very worried last fall. Madeline had lost her job as a hospital psychologist in a reorganization and Chris' hours as a therapist in another health facility were being cut.
They were thinking about some difficult options to support themselves and the two kids when out of the blue they got a call: An elderly aunt had just died, and she had named them primary beneficiaries.
The aunt had worked in the New York publishing world, editing for some of the big houses and sometimes as a freelancer. She had lived frugally, and her estate, to the surprise of all, was substantial. Ford and Talbot would be receiving about $100,000.
"It has really changed our lives," said Ford, 39, who lives on the Main Line. Rather than scurrying out to find new jobs, the couple have decided to set up a joint practice of their own - a dream they never imagined they would attain anytime soon.
"We were told that my aunt wanted her estate used to help secure someone else's future, and that's what is happening with us," he said. "We hope we'll have enough of this money left to use it later for the kids' college, but right now, spending it on setting up the practice seems right."
And the riches from the aunt's estate keep on coming.
"Just yesterday," the husband said, somewhat bemused, "we got a check for $800 from some municipal bonds we didn't even know we owned."
Ford and his wife are typical of today's recipients in several ways: They never knew their inheritance was coming, they had very little savings before it did, and they feel very awkward discussing their good fortune. Indeed, they too asked that their real names not be used for this story.
"It's a little embarrassing - to get this money when I didn't do anything to deserve it," said Ford. "There's even some guilt associated with it, that something good is happening to me because somebody else died."
In families with more "old money," this kind of discomfort is less apparent, say estate lawyers and others involved in inheritance. It is
families with no history of handing down assets who feel especially awkward.
"Because middle-class inheritances are a new phenomenon, people have no family frame of reference, no real emotional bearing," said Avery of Cornell University. "Talking to older parents about their wealth seems improper, morbid. And so it usually doesn't get done."
The baby-boom generation is, however, apparently getting accustomed to gift-giving by parents. Indeed, there are many indications that without such gifts, many baby-boomers could never buy homes and would have real trouble paying college tuition for their children.
According to NYU economist Wolff, 86 percent of the total wealth held in 1983 by baby-boomers age 35 to 39 was given to them by parents. Ten years earlier, the figure was a more modest 56 percent.
This is made possible because a couple can give up to $20,000 a year to a child or grandchild without any tax consequences to either party. Increasingly, the money seems to be going directly to grandchildren.
For instance, a new bank in Princeton that specializes in investing for
college - the College Savings Bank - reports that roughly one-quarter of their accounts were opened by grandparents for grandchildren.
Similarly, a recent national survey by the Data Group, a marketing company in Plymouth Meeting, found that one-fourth of the grandparents surveyed said that they had opened savings or other investment accounts for their grandchildren.
Companies might well tap this new financial market - of grandparents setting aside funds for their grandchildren.
"This is a remarkable market, because it is happening now without any advertising, without any real marketing," said Jeff Ostroff, director of the Data Group's PrimeLife Marketing Division.
"The tendency over 65 today is to accumulate money, and to prepare to pass it along," he said. "As a group, the elderly do not so much spend it on themselves."
This flies in the face of all those bumper stickers sprouting on the cars of older people, the ones that say, "I'm spending my children's inheritance."
Don't worry. Few really are.
