Boomers are devoted parents, and their children, who struggle with a challenging economic environment, appreciate the help. But as more money flows out of retirement accounts to help the next generation, inheritances are shrinking.
Older Americans are increasingly finding themselves transferring money to their adult children, for the sake of supporting those adult children, ultimately, perhaps, reducing their heirs' eventual inheritance. Whether due to demographic changes or changing economic fortunes, Barron's reports in a recent article titled "Boomers Spend Their Kids' Inheritance — On Supporting Them," that interfamily transfers have increased significantly in the last few years.
The article is a good read for anyone interested in retirement and demographic trends.
For estate planning purposes, this trend could create some issues. For starters, if the money is being spent now, then it obviously cannot be part of the estate later and children might receive smaller inheritances than they are expecting.
What if one child receives more support from the parents while they were alive than another child? This could lead to bitterness and even fighting over the estate. This is likely to happen if the estate plan divides what is left between the children equally, even though one or more children received money along the way.
Parents who are helping to support their adult children now should speak with an experienced estate planning attorney about what that means for their estate plan.
No parent wants to leave a fighting family behind as their legacy.
Visit our website to request to meet with one of our attorneys for a complimentary estate planning consultation.
Reference: Barron's (June 26, 2015) "Boomers Spend Their Kids' Inheritance — On Supporting Them."
