4 Reasons You Should Never Rely on a Promised Inheritance
4 Reasons You Should Never Rely on a Promised Inheritance
Cindy Lamothe Fri, October 25, 2024 GOBankingRates
Many adult children see their future inheritance as a safety net — a lump sum of money they can rely on for financial security. But that’s the worst way you can think about it, say experts. “Counting on an inheritance to secure your financial future is akin to building a house on quicksand,” said Kevin Shahnazari, founder and CEO of FinlyWealth.
“The foundation is unstable and can disappear in an instant, leaving you vulnerable and unprepared,” he explained. “I’ve witnessed clients who postponed crucial financial planning, banking on a substantial inheritance, only to find themselves in dire straits when that inheritance failed to materialize or was significantly less than expected.
“One particularly poignant case involved a client who delayed retirement savings for years, assured by her parents of a seven-figure inheritance. When her parents’ business unexpectedly failed, not only did the inheritance evaporate, but she found herself supporting her parents financially — a double blow to her retirement plans.”
Shahnazari said this scenario underscores the unpredictability of inherited wealth and the importance of building your own financial foundation.
Marty Burbank, elder law attorney and owner of OC Elder Law has witnessed the same. “Relying on a promised inheritance to achieve financial goals is risky.”
“I’ve seen many cases where expected inheritances were drastically reduced by unexpected medical expenses, estate tax liabilities or even family disputes. In my experience with estate planning, I’ve witnessed situations where parents had to sell assets for long-term care, leaving heirs with far less than anticipated.”
Below are some more reasons why you should never rely on a promised inheritance.
It Strains Family Relationships
According to Shahnazari, relying on an inheritance can strain family relationships. “I’ve seen siblings turn against each other and children grow resentful of parents when inheritances don’t meet expectations or are distributed unevenly,” he said.
Shahnazari explained these emotional costs can far outweigh any potential financial gains.
It Fuels Complacency
Additionally, promised inheritances can lead to complacency in personal financial planning, Burbank said. “For example, in my work at OC Elder Law, I encountered clients who deferred retirement savings, thinking they would inherit a significant sum.”
He said this mindset hindered their financial growth, leaving them unprepared when the inheritance fell short.
It Can Lead To Missed Opportunities
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