Inheritance: Are You Spending Your Kids’ Money?

You’ve always wanted the best for your kids, and have done what you can to make their lives as easy and as fulfilling as possible. It’s only natural. But sometimes you’ve had to make a choice between your own enjoyment and doing something a bit extra for the next generation. Now that you’re at or nearing retirement, estate planning and “inheritance spending” presents you with another of those choices.

How much of your wealth do you want to leave for your kids to inherit? And how much do you want to spend on yourself? These are personal questions that depend on your own moral sensibilities, as well as your financial situation. When you create a spending and savings plan for your later years, there are a few things you should consider.

First and foremost, you’ll need a realistic assessment of how much it will take to support you in your later years, even without any luxuries. Many people think they’re prepared, but retirement can be more expensive than you might think.

Depending on how long you have until retirement and how far you’ve gone toward saving for your own needs, leaving an inheritance might not need to be a concern at all. But if you’ve crunched the numbers carefully and figured out that you really do have a disposable income, you’re left with a dilemma. Is spending the money on yourself — on travel, golf games, fancy dinners, a vacation home — the reward for a life of hard work, or selfishly spending your offspring’s leg up in the world?

There is also a concern that leaving kids with a large inheritance will fail to give them a sense of the value of hard work. From a generation that largely sees itself as “self-made,” the idea that leaving an inheritance as a moral good can be repugnant.

At the same time, it seems likely that the previous generation saw a period of economic growth and prosperity that is unlikely to be repeated any time in the next century. The next generation isn’t facing the same world when it comes to being “self-made,” and an inheritance can be the jumpstart your kids need to stake a claim in an increasingly competitive landscape.

So, to live it up or hand it down? It depends on how much you have, what dreams you’ve been putting on hold and what you think your kids will be able to do with — and without — an inheritance.

Talk to a financial expert today, so you can start planning for your future, and future generations.