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Wealthy Individuals Worry about Leaving Too Much Money to Heirs, Do You?

Nov 16, 2021

Paul Labiner, Esq.

Paul Labiner, Esq.

Managing Partner

It may sound like a ridiculous question, but can an inheritance be “too big”? The answer is a resounding “yes” according to a recent Motley Fool survey of Americans with a net worth of +$1 million.

Even though 76% of those surveyed say they will leave an inheritance, 67% were concerned about leaving too much of an inheritance to their heirs. The top two reasons cited for this apprehension were:

  1. The assets would be used irresponsibly, and
  2. The heirs lack the skills to manage a large estate.

Many people today know examples of rich, spoiled children who don’t care about pursuing a career and have no reason to do so because their life has been entirely de-risked.

Kevin O’Leary

Shark Tank host and investor, CNBC Interview

The wealthy individuals surveyed agreed on a number of other estate planning–related issues as well:

  • Conditional Inheritance: 67% of wealthy individuals plan to place conditions on how or when heirs can access their inheritance.
  • Grandkids Only: 64% of wealthy individuals have considered establishing a generation-skipping trust (GST).
  • Tax Mitigation: 85% of respondents said possible tax burdens affect their estate planning strategies.

Inheritance Issues for All Families

Concerns over asset mismanagement, beneficiary irresponsibility, and tax mitigation are not just for the ultra-wealthy. Individuals from across the wealth spectrum may be concerned about how, when, and to whom their assets transfer.

There are a number of easy solutions to the “irresponsible heir” problem, including incentive trusts, which place conditions on when and how heirs can access inherited assets. In fact, revocable and irrevocable trusts provide the flexibility to resolve a broad array of unique concerns that you might have about the future of your estate.

If I had what my sons have, I wouldn’t have what I have.

Scott Galloway

Serial entrepreneur and marketing professor at NYU Stern, The Prof G Show podcast

However, addressing concerns over tax mitigation requires more intricate and bespoke strategies. The types of assets, titling, your marital status, and other factors will need to be accounted for to develop an effective tax mitigation plan. And given the significant tax reforms proposed recently in conjunction with President Biden’s infrastructure bills, the estate, gift, and income tax landscape could soon be upended.

Moreover, the size of an inheritance isn’t the only issue to consider. Your circumstances may involve:

  • Protecting children from a prior marriage (i.e. blended family),
  • Caring for minor children or a special needs child,
  • Defending against estranged family members,
  • Gifting to religious organizations or civic institutions, or
  • Bequeathing assets or personal effects to friends or non-family caretakers.

Structuring an inheritance to avoid these landmines and to achieve all of your goals can be a complex undertaking, which is why you should seek the advice of an experienced estate planning attorney.

Plan Ahead for Success

Despite the various issues identified above, you can and should create an estate plan that addresses each and every unique facet of your situation. Whatever your particular concerns, with sufficient planning you can develop an estate plan that accomplishes all of your goals.

The first step is speaking with an estate planning attorney to determine what planning strategies are best for you and your family, and the sooner you take this first step, the better. So, don’t wait. Call us at 561-998-2362 or request a consultation online.

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