You may have read about the “Great Wealth Transfer.” That refers to the estimated $84 trillion that’s due to be left to future generations over the next couple of decades as the Baby Boomers and those a bit older and younger pass away or gift some of their assets while they’re still alive.
If you’ve been able to accumulate or inherit some of that wealth, you will be able to make life a bit easier for your children and grandchildren. While you want them to appreciate their good fortune – especially if your parents weren’t able to do the same for you – you likely don’t want them to feel “inheritor’s guilt.”
That’s not an uncommon phenomenon among those who inherit a substantial amount of money or other assets. This doesn’t have to mean millions of dollars. People can experience inheritance guilt over any sum of money that’s unexpected or far more than they’ve ever had.
The reasons behind inheritor’s guilt are varied. When parents or grandparents have lived frugally their whole lives and then leave a large inheritance, their heirs can feel guilt that they never spent it on themselves. If a parent built up a successful business and significant assets, an adult child who’s still figuring out what they want to do may feel like they don’t deserve the inheritance.
How can you prevent inheritor’s guilt?
One way is to minimize any potential shock. While you don’t need to give your heirs exact numbers (and likely can’t), you can and should give them some idea of what kind of assets you’ll be able to leave them.
You may want to connect them with financial and tax advisors so they’ll be better prepared to handle it. By discussing your estate plan, they also have the chance to ask you to direct some of the assets intended for them into their children’s college funds or maybe to a charitable organization they support.
By talking to them about their inheritance, you can discuss how you hope they’ll use it – such as buying a home, starting a business or making sound investments that will grow substantially. This will help give them a purpose for the assets – which can prevent them from misspending and depleting them. If that’s a real concern, however, you can place the assets in a trust so they don’t have direct access to them.
Every family is highly unique. Having experienced estate planning guidance can help you make the best decisions for yourself and your family.