As you begin to create your estate plan, you’re likely focused on how you can best share the assets you’ve acquired over the years with loved ones and worthy non-profit organizations. You’ll probably focus on ways to prevent your estate from being taxed unnecessarily and needing a long, complicated probate process.
Chances are, the last thing you want to do is cause anyone to feel guilty about their inheritance. If you’re among those in the “Baby Boomer” generation or even a bit younger who have inherited and/or accumulated a fair amount of wealth, some beneficiaries may indeed feel guilt – particularly if the size of their inheritance is unexpected.
This isn’t just something experienced by those who inherit millions of dollars. Those in very wealthy families already have some idea of the extent of their family’s wealth. It’s more likely to occur when a parent or other older relative who led a relatively frugal lifestyle and never had a particularly high-paying job leaves someone their life savings that turn out to be surprisingly large.
That can cause all kinds of guilt that this person never spent this money on themselves. For some people – especially those who remember the Great Depression or had parents who did – spending money on anything that could be considered a luxury or extravagance can cause great discomfort.
Communication is important
There are numerous ways to prevent inheritor’s guilt. For example, minimize surprises. Give your adult children or other beneficiaries some idea of what they will be inheriting. You likely can’t give them an exact dollar amount – at least if you plan to stick around for a while. However, you can give them a ballpark figure.
Letting your loved ones know how you hope they’ll use the money can also prevent guilt. Maybe you’d like to see it go towards their children’s education or growing their business. If these are near-term goals, you might want to consider gifting them assets now if you can afford to.
Helping ensure that the money is used responsibly
If you have children or other loved ones you want to leave something to, but you fear they won’t handle it responsibly, you can put the assets in a conditional trust with distributions controlled by a trustee based on your instructions.
It’s a lot to consider. Having experienced estate planning guidance can help you make the best decisions for your legacy and your loved ones.