People in California may have seen a recent financial news article in Forbes, which discussed the issue of inheritance. Specifically, Forbes explained how people in the Baby Boomer generation may actually be leaning against leaving assets to their children when they pass on. In past years most people in the Boomer generation said they thought it was important to leave an inheritance. That number now sits at under 50%.
Every person has their own unique objectives and desires for their estate plan, but one common concern about leaving significant assets to heirs is that they simply will not put the money to good use. Parents undoubtedly want the best for their children, but wise financial planners know that a person who suddenly comes into wealth may not be prepared to use it responsibly and may make poor financial decisions. Even worse, the effects of coming into money could very well harm a person's lifestyle and limit their human potential by not forcing them to work for what they earn. A major part of good estate planning is asset protection, so people who go through the work of creating an estate plan are not doing so to see their life's work disappear.
There is a way for a person with a substantial estate to safely and responsibly leave money for personal use by future generations, but it does take some work on both sides. For one thing, potential heirs should be willing and able to actively demonstrate that they are capable of making good financial decisions by practicing it. A potential heir who spends recklessly in anticipation of receiving an inheritance may be sabotaging themselves, especially when their recklessness may send a strong enough signal to dissuade the benefactor not to leave an inheritance at all.
Parents may actively encourage their children to act responsibly and may even place certain stipulations and requirements they have to meet to receive financial assets in an inheritance. With the help of an experienced estates and trusts attorney, finding the right combination of trusts, as well as a will can help parents get the peace of mind they need before they leave a substantial inheritance for their children.
Source: Forbes, "Why You May Not Get An Inheritance (And What To Do About It)," Robert Pagliarini, April 30, 2014