The Inheritance That No Longer Exists
My younger brother, a keen saver from the times of infancy, sat in dismay at about eight years of age at the thought that all my parents would leave us would be their debt. He may not be far wrong, and according to an article by Ian Cowrie in the UK Telegraph, we wouldn’t be alone in that. Two thirds of adults expect to inherit money, while half of those aged over 50 are already spending the money they would have thought to have left their children.
Survey Says
The survey, from Skipton Financial Services, found that more than a third of the older group said leaving an inheritance would be a financial strain, and more than a fifth did not expect to leave anything when they died. It’s not particularly surprising when you think about it- funding a retirement is expensive enough, let alone the costs of care when you become dependent, without keeping on eye on the nest egg for your children.
Expectations
The crunch will come when the youngsters expecting an inheritance realise, either after their parents have passed away or prior, that there will be no money left over. With the rising costs of living, especially the amount of debt people are exposed to by their middle age, it is, as Cowrie suggests, no shock that young people are hanging out for a bit of a windfall to give thema leg up or a bit of breathing space. And while the Baby Boomers are still likely to inherit from their frugal parents, that is unlikely to be repeated for the the next generations.
Open The Floodgates
The sooner it all gets out in the open the better, when it comes to inheritance. Money and family is never the greatest of mixes, so protect the most important asset you have- family unity- by being frank about your money and about what you intend on doing with it. People, children, can get very funny about inheritance money. I tend to fall into the school that you earnt it, so you have the right to spend it however you wish. If that’s in the form of a donation to the Fund For Water Rats, so be it. The most important thing is that everyone knows, explicitly, what your wishes are and how it will all fall out. Get it in writing, and get it witnessed.
Care
The other necessary consideration, other than retirement, is care. No one wants to think about their parents being unable to look after themselves, but at some point this might happen. And when serious care is required, so is the financial backing to provide it. More and more frequently, what might have once been considered an inheritance is now being spent to pay for a position in a nursing home. And this is the reality of modern-day finances.
The Nitty-Gritty
Australia has abolished the inheritance tax, something I draw from American and UK TV shows as quite a big deal overseas, so there is no need to worry on that account. Just ensure you keep full records of all transactions and what costs the executor has had to incur. Be wary of putting kid’s names on assets, a power of attorney or guardianship is just as good, unlikely to cause rifts and will not expose your children to any liability or creditors should anything go awry.
Related Posts
