Many parents believe it is important to leave an inheritance to children assuming they can afford to do so. They want to help their kids, or they feel they owe it to them. Others feel the opposite. As a matter of principle, they think children should not rely on an inheritance and instead, go make their own fortune. Sometimes, the issue is that there is a difficult relationship between parents and children affecting the decision of whether and how much to leave to them. Ultimately, there is no requirement that you must bequeath your assets to your kids. The most important point is to take the time to consider your wishes and then plan for them to avoid problems.
Anderson Cooper was quoted as saying “I don’t believe in inheriting money. I think it’s an initiative sucker. I think it’s a curse.” Do you agree? Let’s say you do agree. What will you do with your money instead? Maybe there are other family members, friends or charities important to you and you could leave it to them. If those are your wishes, you need an estate plan to make it happen. If you die without a will, state intestacy laws govern who gets your property. Typically, it goes to your spouse and/or children. If you have neither, then there is list of other relatives that qualify under state law. In no event will it go to friends or charities unless you provided for it in a will, trust, insurance policy or other beneficiary designation form.
Let’s say you don’t agree with Anderson Cooper and you think kids should get an inheritance. If you don’t have an appropriate estate plan, you can’t guarantee that will happen. For example, it could all go to your spouse who won’t give any of it to your children from a prior relationship. Alternatively, most of your assets could end up going to beneficiaries of your insurance policies and retirement accounts or joint owners of property and bank accounts. Significant assets may also be lost to estate taxes or litigation among family members. Even if it does go to your children, it may not go in equal shares or maybe you want it to be unequally distributed, but either way, your wishes may not be implemented because of poor estate planning.
Whatever your beliefs about leaving an inheritance, the worst situation is to do no estate planning. Then you have no control over what happens, and your family is left to deal with the stress, family conflict and lost time and money. Is that what you want to happen?
If you need assistance with planning, contact me for a consultation.
For more information, read our related blog post – Why You Need an Estate Plan: 8 Questions You Should Ask Yourself.