3 Reasons Retired Boomers Shouldn’t Give Their Children a Living Inheritance

If you have created a significant amount wealth over the course of your life, you may begin to think about what will happen to him when you leave. You can donate it to a worthy cause or pass it on to your children. But what if you want to go ahead and give them some of your wealth right now before you leave?

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By 2045, approximately $84 trillion is expected to pass from the Silent Generation and Baby Boomers to their children. And much of this will be done as a living legacy.

This huge transfer of wealth has sparked much debate about whether leaving a living legacy to your children is a good idea. Keep reading and we’ll look at some reasons why retired boomers shouldn’t leave their children a living inheritance, as well as a few reasons why they should.

Why you shouldn’t leave a living inheritance to your children

Risking your own financial security

The desire to see your children succeed is common. This is true not only in terms of their careers, but also financially. Seeing them experience things like buying a house or traveling the world can give you self-satisfaction because you get to witness and enjoy their success.

However, you also need to think about your own needs. If you plan to pass on an inheritance to your children while you are still alive, it is important to do so carefully. What happens if unexpected expenses arise? Are you still going to have the means to continue your current lifestyle?

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Family grudge

If you have several children to whom you plan to leave an early inheritance, you need to do this carefully. It’s easy to leave money and know that it’s evenly distributed. But what if you plan to leave your business or real estate to someone?

These types of assets can have fluctuating values, and if one dependent receives something that becomes more valuable, it can cause tension in the family. Not only between brothers and sisters, but also between you and them.

Possibility of financial irresponsibility

Let’s be honest with each other. Sometimes people make bad decisions related to money. Lifestyle inflation is a real thing and can have serious consequences. When people have extra money, whether from a promotion at work or an inheritance, they feel more freedom. They want to go out and treat themselves to something they wanted but couldn’t afford. And while this is normal to a certain extent, there needs to be some restraint.

Without proper discipline, early inheritance for people who may not be prepared to manage large sums of money can end in failure. This is when it may make sense to put the funds into a trust, where you can have more control over how they are used while you are still alive.

Why you should leave your children a living legacy.

Potentially reduce property taxes

Depending on how you set up your estate plan, your assets may or may not go through probate after your death. Not only can this be a lengthy process, but it can also trigger estate taxes, which will reduce the size of the inheritance your children can receive.

Instead, if you give your children a living inheritance, you will be in control. You can strategically gift assets to each dependent, which will help reduce the estate taxes they may have to pay.

Help your children today

It has been mentioned before that we as parents want our children to succeed in whatever they do. Luckily, we have a lot of control over this. We can teach them to distinguish between good and evil. We can save money so that if they want to go to college, they won’t have massive student loan debt hanging over their heads. Or we could just help them get out of financial trouble.

Let’s be honest: Some younger generations, especially millennials, have dealt with their share of problems. As many of this generation began their careers, they faced a financial crisis. Many have watched from the sidelines as home prices soared to unaffordable levels and are remembering to live through the pandemic.

All of this contributed to some of them struggling to achieve financial success. However, leaving your children a living inheritance can not only help parents enjoy the wealth they have created, but also help their children find some breathing room financially.

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This article originally appeared on GOBankingRates.com: 3 Reasons Retired Boomers Shouldn’t Give Their Children a Living Inheritance