Many children from wealthy families in California assume they will be receiving an inheritance from their parents. The popular belief that parents will leave a significant amount of wealth to their adult children after they pass away may actually be a myth, according to a new survey by HBSC.
The survey found that 59 percent of parents in the United States plan to leave their children any inheritance. Does this number seem low? That’s because it is the lowest percentage of all the countries surveyed.
Why are parents in America less likely to give inheritance to their children compared to the other nations involved in the study? There could be several reasons, but many estate plans in the U.S. are changing and seeing baby boomer couples focus on spending more of their wealth instead of saving it all to pass on to their children.
Part of the reason fewer parents are planning to leave an inheritance could be due to more parents thinking leaving a significant amount of wealth can actually harm their children. Some parents think if their children already have a lot of money, they won’t feel the need to try as hard to go to college or follow career aspirations. Other parents may want to see their children earn their fortune on their own.
Whatever the reason, fewer parents are planning to leave inheritance for their kids. The question is: do the kids know this? Like we said, many adult children in California believe they will receive an inheritance from their parents. Some of them may be in for a big shock when they don’t receive as much or any inheritance from their parent’s estate plan. This could leadto very hurt feelings and resentment.
That is why parents need to think about whether or not they want to leave their children inheritance. After making this decision, it is best to discuss the issue with your children before it’s too late. Talking about your estate plan and if you are leaving any inheritance to your kids can be challenging, but discussing the issue now can reduce any hurt feelings, anger and resentment in the future.
Source: Forbes, “Why Bother Leaving an Inheritance for the Kids?” Larry Light, Feb. 27, 2014