inheritance? don’t count on it.

Do you think about how much you’re going to be able to leave your kids when you go? I don’t. Am I bad mother? I don’t think so.

I just don’t think that inheritance is something you should count on. I also don’t believe that inheritance is an entitlement.

Will I have any inheritance to leave?

I can’t be sure that I’m going to have enough money to take care of myself in my golden years but; and it may sound cold; I am certainly not going to compromise my own standard of living just so I can be sure to have money left to leave my kids.

I love my kids more than anything in this world but, if I did my job right, they should be able to take care of themselves. Any inheritance that I can leave them should not be a meal ticket, it should be gravy.

Money or no money – make sure you have a Will anyway.

Regardless of whether or not there is going to be anything to leave, I still have a Will and my kids will get to share in the bulk of any estate I do leave. The thing is, no one can predict what that “estate” will be.

That’s why my lawyer recommended that I not put dollar amounts in my Will. He said that if I chose to leave a stipend (a fixed dollar amount) to any one person or organization that there was no way to know at this time how much of the estate that stipend would represent in the future.

That dollar amount stipend could end up being too little compared to the final tally of the estate worth or, worse, it could end up being most of the estate leaving less than you wanted to others.

For example; if my estate is worth $500,000, then a $25,000 stipend would only be 5% of my estate. But if my estate wound up only being $50,000, then that same stipend would represent 50% of my estate.

Use percentages, not dollar amounts when allocating money in your Will.

My lawyer said to use percentages and this is great advice! If you leave a stipend of 5% then there is no guarantee what that amount will be at the end but it will always be 5%.

Doing it this way also means that I don’t have to update my Will as often. If my kids each get 40% of my estate and the remaining 20% is distributed elsewhere, then it doesn’t matter if my financial situation fluctuates over the years; the percentages don’t change.

Should you count on an inheritance?

It’s not a good idea and I will tell you why. An inheritance is not guaranteed. Again, you don’t know how much there is going to be – if anything!

Your parents may be well off and living in an expensive home that is fully paid for but that is now. Things happen.

They are retired now, and they have worked hard, so traveling and finally enjoying some luxuries in life might be in store. It’s their money and they should be the first in line to spend it however they want.

That’s what my grandparents did. I didn’t know them to travel anywhere before my grandfather retired but when he did – oh boy! They went everywhere! They were going on trips everywhere for about 5 years. They finally got to see the world and it was a great time for them. Only when they were finished were they ready to pull the rocking chairs out onto the porch, relax and put together photo albums of their adventures.

I’m pretty sure that my grandparents didn’t give one thought to how much of their kids inheritance they were spending.

What if your parents live far longer than expected and outlive their savings? They may need to sell their home, downsize and use the equity money to continue their desired standard of living for another 10 years.

And let’s not forget that aging brings health challenges that you can’t predict. And health challenges always cost money.

What if there is no inheritance at all?

You can’t predict how your parents are going to set up their Will. They may skip you and your brother and leave everything in trust to the grandchildren.

You have no way of knowing and, guess what? – they don’t have to tell you!

Or maybe the investments that were made took a fatal turn. And it may not even be their fault. I know people who have lost their entire pensions because of bad decisions made by their company or because their company went bankrupt.

There is no law that says you have to leave money to your kids.

There are no laws at all determining who or what someone leaves their estate to and it’s very hard to argue against a Will simply because you’re a son or daughter.

Even billionaires like Warren Buffet and Bill Gates have stated that they aren’t leaving their fortunes to their kids.

An inheritance can bring out the worst in people

There is also the very sad fact that inheritance can bring out the worst in people. There are so many stories of inheritance destroying families. Even if you do try to be as fair as possible (not that you have to), it doesn’t mean that kids (or ex-wives) won’t fight.

You hear horror stories all the time.

Billy remembers that Sally got piano lessons when she was nine so that should be deducted from her inheritance. Or squabbles over how much the family cottage is worth if one or the other wants to keep it.

You think I’m kidding but I am not! Money changes people and contesting a Will and/or court battles with siblings will only ensure that your parent’s estate will go to lawyers. Even if things do finally get settled, it can sometimes take years.

And what about second marriages?

Common-law:

  • The laws are different for common law; Dad is not automatically entitled to his common-law wife’s estate the way he would be if married. And if there is no legal agreement, there may be no provision for the time and money he put into the relationship leaving Dad with nothing.

Versus marriage

  • If Mom passes and her new husband gets everything, there is no guarantee that any of her estate will come to you upon his passing.

Kids – yours, mine and ours

  • Blended families usually mean more people to share the estate with so you may not get what you expected (but you shouldn’t be expecting anything, should you?).

Mi casa es tu casa?

  • Did Dad’s new wife move into Dad’s house? If Dad passes, the home will likely become hers. He may not have thought to make provisions so that his kids benefit from any eventual sale.

The bottom line is that you have no control over inheritance – how much or whether or not there even is one. So you shouldn’t count on one. And you shouldn’t let your kids count on one.

My kids didn’t even know about inheritance until recently. We were talking about money and they were shocked to know that, if I pass, they get whatever I have. I told them not to get any ideas about bumping me off right now though; they should wait because I will probably be worth a lot more in 20 years. It was hilarious!

I am fortunate to still have my mom and dad so I haven’t faced the inheritance issue yet but I know that, when time comes, there isn’t going to be whole lot for my siblings and I to argue over. And that’s okay.

My parents have given me the tools I need to take care of myself and I hope that I can give those same tools to my kids. I do hope that I will be able to leave some gravy for them for the future but I don’t lose any sleep over it.

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Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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