Inheritance – reasons for giving and not giving

Should you leave an inheritance and if you do, what are the most valid reasons? Writing for GoBankingRates, financial planner and investment expert John Csiszar points out that an inheritance is a gift and not an obligation.

While there are laws on intestacy that specify who will inherit your estate if you don’t leave your own instructions in the form of a valid will, there is no law saying you have to leave anything at all.

And though most people still leave money to their spouse or children, close friends or a good cause, others believe leaving anything behind is a waste. What are the reasons for and against?

Providing for the family

Providing for family members is the number one reason. An inheritance can be what a family needs to carry on, particularly if the deceased family member was still working and the household’s primary breadwinner.

Money left in a will can often finance important life stages such as education or weddings for the children or grandchildren. People who do not have their own children often leave their estates to surviving siblings or nieces and nephews to keep the money “in the family”.

Another key motivation for an inheritance is gifts or rewards—a recognition of the people in your life you feel deserve it. They might be teachers or employers who helped you succeed, carers who have provided help, or the money can go to family members when they achieve key milestones, such as graduating, as a “reward”.

Andrew Carnegie legacy

Many wealthy benefactors have left money for the public good. A well known example is Andrew Carnegie, who is famous for saying that the man who dies rich, dies disgraced. He gave away about $350 million (about $5 billion in today’s money), funding more than 200 libraries, the Carnegie Mellon University and other institutions and charities.

Another reason to leave money or other gifts is to let people know how important they were to you. Specific requests can provide warm memories.

And what about the reasons for not leaving an inheritance? One study by the Journal of Family and Economic Issues revealed that on average, adults who receive an inheritance save only half the amount, while nearly 20 percent of baby boomers who received $100,000 or more blew through all of it.

Generational wealth

All-in-all, 70 percent of families lose their wealth within one generation, and 90 percent lose it by the following generation. With a track record for generational wealth so damning, you may want to put it to more productive use during your own life.

Then, there is the worry that the next generation won’t find their own way. If an inheritance is substantial enough there may be no incentive to work. Famous billionaires Warren Buffett and Bill Gates are on record for saying that their kids will not inherit the bulk of their fortunes.

Sometimes, people prefer to give gifts while they are living, so that they can se the benefits of the money. Why wait when you can see your children enjoy their education or move to a nicer home? This can also provide tax benefits.


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