Inheritances for adult kids: not a snap decision for most planners

On Behalf of | Oct 29, 2020 | Wills |

“Simple, right?”

Actually, matters surrounding inheritances to adult children are often light years away from being simple.

Which makes that comment stated by professional money manager David Foster in a recent estate planning article decidedly tongue-in-cheek. Foster actually confesses in his piece that even a narrowly focused discussion of kids’ inheritances could easily end up being “a 5,000-word blog post unto itself.”

That means inherent complexity relevant to the subject, which exists for several reasons.

One of them ties to this fundamental and often complicating point, posed as a question: What is the ballpark figure on the amount reasonably expected to be distributed to heirs?

Is it a thousand bucks? A million? An amount somewhere in the stratosphere?

A close value-linked estimate must be made by most planners before they can make sound and tailored decisions concerning how to prepare children for inheritances and communicate the details to them.

Valuation might actually be the easiest part of any inheritance planning, even if it is not absolutely precise. Many planners find that assessing each child’s ability to handle an influx of wealth is often a far harder chore. After all, some adult children are capable of running a business, while others are a good bet to quickly squander anything coming their way.

If you’re a planner, how do you optimally communicate your decision and linked planning strategy to the kids?

Like many other financial advisers, Foster is a fan of candor. He underscores his support for “complete and total transparency when it comes to sharing the details about your money with your adult children.”

The kids might not always be happy with what they hear, but at least they won’t be surprised down the road. And, as Foster duly notes, a bit of straightforward talk at a timely moment might tweak some inheritance particulars in a way that is beneficial to all affected parties.