It is one of the biggest fears wealthy people have: if they leave a large inheritance to younger family members, they will not be motivated to make their own money and will instead live off their inheritances. In light of that fear, a recent survey of affluent 18-22-year-olds seems troubling at first glance.
A large percentage of them are expecting that their retirements will be funded by the inheritances they receive. This could mean they are spending all their own money and not saving any of it as Bloomberg discusses in "Rich Kids Are Counting On Inheritance to Pay for Retirement."
While the common fear actually happens in real life, which is why the fear developed in the first place, it is not likely that is what is happening here. When one looks deeper into the situation, the young people in the survey are not wasting all their money.
They have a lot more expenses at their age than older generations did. This is in part due to student loan debt. House prices are also continuing to rise in urban areas and incomes for those just starting out have remained mostly stagnant for many years. For now, the kids cannot afford to save. That might change in a few years, as they grow into their careers.
If you do want to know how to best leave an inheritance for a younger family member, then visit with an estate planning attorney who can help structure it in a way that is unlikely to lead to wasteful spending.
Contact Benecia Flores at the Petrosewicz Law Firm at (281) 344-9455 or [email protected] to discuss preserving your inheritance.
Reference: Bloomberg (June 7, 2018) "Rich Kids Are Counting On Inheritance to Pay for Retirement."
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