Should You Talk to Your Kids About an Inheritance?
October 17, 2013
When parents draw up their wills, one of their primary concerns is providing for their children in effective ways. Leaving a sum of money, assets or even properties to children in an inheritance can be a good way to make sure children are financially protected or supported, but helping them understand their inheritances can also be a crucial step in handing down assets.
As many Los Angeles parents already understand, children and parents do not always see eye-to-eye on issues. That is why parents will want to consider discussing the presence, size and expectations of an inheritance with their children. While it can be a difficult discussion to have, it can end up saving families a lot of anger and confusion.
About 25 percent of people between the ages of 18 and 59 who responded to a recent survey report that they expect to receive an inheritance of some size. They assume, correctly or not, that their parents will leave them a certain sum of money and many of them say that their presumed inheritance will go towards paying off debts or retiring.
This is a considerably different perspective that that reported by parents who responded to the same survey.
According to the parents, they expect to leave less money to their children because they expect to spend more of it on their own health care, as Americans are living longer than other generations. Parents who have earned considerable wealth during their lives also are leaving less to their children and donating more of their money to charities. Many are of the belief that if they made their own fortunes, their children should be expected to do the same. And some parents are not leaving any inheritance because they are fearful their child will spend it irresponsibly.
Because of how different these views are on inheritances, parents will want to consider discussing what a child can expect to receive, or not receive, after a parent has died. This gives families the opportunity to get on the same page and ask questions before it is too late.
As soon as a person becomes a parent, it can be a good idea to update a will to reflect this major life change. Whether that update includes an inheritance or not is a personal and individual decision. But it should also be one that is communicated clearly and effectively.
Source: The Kansas City Star, “Kids and Money: If you plan to leave an inheritance, manage expectations,” Steve Rosen, Oct. 14, 2013