Parents struggle over ‘inheritance talk’ with kids by Rico Dilello


By Rico Dilello

Parents struggle over ‘inheritance talk’ with kids

You would be surprised to learn how many family feuds develop over an inheritance. It isn’t just a problem for wealthy families. The size of the parents’ estate isn’t as important as communicating what is in the will.

Many fret over whether the inheritance they have earmarked for their heirs might demotivate them to succeed on their own and negatively impact their child’s work ethic. Others question how much they should reasonably bestow and when to tell their kids about the financial windfall coming their way.

“According to a study from consulting firm Accenture, baby boomers have started to pass along their life savings to their heirs, and this process will continue over the next few decades. When done, some $30 trillion will be transferred from one generation to the next.”

The delay in developing dialogue with their children regarding money matters is also due to confidentiality. They don’t want their children talking to family and friends about their wealth. Every family is unique, you need to get comfortable with the process of sharing that information.

Most children expect to get an equal share in their parent’s estate. Problems arise when parents do not communicate changes to inheritance amounts.

For example:

  1. My mother’s neighbour with three children had one of her daughters living with her as a caregiver. The daughter and son in law took care of her for many years. When she died, she left half the house to her daughter (the caregiver) and split the other half into three equal parts. This lack of commutation caused a big rift among the siblings and they are no longer are talking to each other.
  2. My mother in law thought that her older brother had unfairly penalized her over a money gift that she got from her father. Acting as the executor of the will, her brother considered the gift was a loan from the estate. He not only deducted the amount from her share of the inheritance but also deducted an interest charge. This lack of documentation caused a big rift in the family.
  3. My elderly mother has decided to leave only half of her estate to me. The other half will be given to her grandchildren. Being the executor of her will, I have informed my children (her grandchildren) regarding her wishes. There will be no surprises and no hard feelings in our family

Having worked as a financial advisor, I have seen many of my wealthy clients included some strings attached to inheritances. Such as, requiring beneficiaries to finish their college degree before collecting a dime. Others may release assets for the sole purpose of buying a home. Still others use incentive trusts, which are intended to keep beneficiaries motivated by imposing specific conditions for distributions of trust income or principle.

Avoid family rifts, commutate your wishes to family members. Document all family gifts so that there are no disputes after you are gone.

By Rico Dilello



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