Should you tell your kids they are on track to receive a large inheritance? A Reddit user posted this question recently. The original poster (OP) said that he and his wife have a net worth of around $8 million. They’re planning to retire soon, but don’t plan to spend very lavishly so they expect to provide a large inheritance for their two kids.
The OP said that while the kids know the parents have some money, they have no idea how much. He’s wondering if telling his 18 and 22-year-old sons will cause them to lose their motivation for working hard and building their own success or if he should share the details with them.
The challenges of leaving a large inheritance
The OP is in an enviable position, of course, but he’s also in a difficult situation here, because there are definitely some situations where kids who have rich parents fail to thrive themselves because they know their inheritance will come someday. At the same time, it’s important for parents who are leaving a lot of money behind to prepare their children for how to manage it effectively.
The OP also said he hopes it will be a long time until the kids inherit, but he may not necessarily want to wait to help out his children until after he passes. Young people often benefit significantly from getting a leg up earlier in life, when they are going to school or when they are trying to buy their first home and raise a family. The money can do more for them than when they are older and already well-established.
The OP may decide he wants to help them out during his lifetime when they most need the money and when he can see them enjoy it. If he’s going to offer this kind of help, though, he’ll need to let his kids in the loop about the fact he has a lot of money.
Should parents share details about their inheritance?
Ultimately, whether the OP tells his kids about the money or not should depend on how he thinks his children will handle the information.
He may want to wait until they are a little older and he sees them working on their own goals and handling their finances. If they are already on a good path, it’s less likely they will get off that path and lose their motivation just because money is coming decades down the line.
If he’s really worried about them losing their drive, he could also set conditions for inheriting. For example, some parents may require their kids to have completed college and to be gainfully employed if they want to receive an inheritance. Imposing these kinds of restrictions can create family tensions, though, so unless the OP has reason to believe that his kids need this kind of motivation, he may be better off waiting to see if they thrive on their own accord.
The OP also doesn’t have to provide specific details about his finances. He can let his kids know they’re going to inherit some money and give them the support they’ll need to manage it in the future, but he doesn’t have to give them hard numbers. Since he will be living off this money and probably doesn’t know exactly how much he’ll have left anyway, there’s no reason the kids need the exact dollar amount when he has the inheritance conversation.
Talking with a financial advisor about how best to structure the inheritance could also be valuable for the OP as a professional may be able to give him some helpful advice about how families can successfully manage intergenerational transfers of wealth over time.
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