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Monday, July 2, 2018

Rich Kids Are Counting on Inheritance to Pay For Retirement

I always find the idea of expecting an inheritance interesting to watch in terms of how that expectation makes people behave. As usual, I fall back on my own experience with my own clients, since I have now more than 30 years of dealing with people talking about inheritance from one angle or another.

This recent article from Bloomberg discusses the fact that the younger generation of wealthy families is counting on inheriting enough money to  have a comfortable retirement. Click here to read the article.

The article takes a sympathetic look at those wealthy youngsters, with a things-are-tough-all-over view of the situation. The only specific example given in the article as to why things might be "tough" for wealthy kids is student debt. In my experience, kids from wealthy families don't have student debt. That's almost exclusively the burden of those from less affluent families.

When I speak with families who are wealthy - either moderately so or extremely so - one of their main priorities is to ensure there are funds available to put the kids or grand-kids through university. That's so prevalent as to be almost universal. Even the parents who are concerned that too much money will cause their children to be unmotivated and lazy want to ensure that there is free schooling for them.

My will-planning process with clients always involves a review of their assets. There are plenty of good reasons for this including identifying potential tax liability, ensuring that joint property and beneficiary designations are aligned with the overall plan, and knowing what is to be passed to the next generation. Very, very few people mention that they expect to inherit anything. And yet, as I  mentioned, those same clients are determined to ensure that their own children are looked after financially.

I don't think the leaving of wealth within the family has changed much over the generations. I think what has changed is the current trend of living the high life without restraint, savings, or any sort of self-deprivation, and still expecting to have money to spend, otherwise known as affluenza.

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