The world of inheritance in the U.S. with its possibilities of transferring vast sums of wealth to another generation is, to say the least, an interesting topic. In Hollywood, many movies center on intensely contested inheritance battles.
A few factual references provide some current information on the matter, as well as some timely advice.
Children might inherit less than they expect
The Atlanta Journal-Constitution reports that millennials might have an unrealistic view of inheritance. One survey shows that 70% of millennials expect an inheritance, while only 40% of parents planned to leave money to their children. Another recent survey found a similar disparity between expectations of inheritance and actual money passed on to children.
With an estimate of at least $30 trillion in assets, the Baby Boomers do have large amounts of money. However, this generation could live longer than previous generations, could spend more and could face rising costs for medical expenses and assisted living facilities. One financial advisor stressed that relying on a windfall from parents often results in disappointment.
People should treat an inheritance wisely
A report by CNBC offers a more favorable view of how much money children will inherit in the coming years. While the amount of money transferred is unknown, a few solid principles can help individuals make the most of inherited wealth. The following guidelines offer good advice:
- Use the windfall to achieve financial independence for the long haul
- Minimize the amount of taxes sent to the taxman
- Manage the money wisely
- Conquer the urge to spend everything at once
Dealing with new wealth represents a great opportunity. Many lessons from the past show that people sometimes squander wealth that comes all at once.