Why You Can’t Count On A Fat Inheritance
Why You Can’t Count On A Fat Inheritance, A third of rich Americans say it’s not critical to leave money to their kids, a survey finds. Tough luck, kiddos: Your rich parents may give the fat inheritance you’re expecting to charity instead of to you.About 32% of high and ultra-high net worth Americans say it isn’t important to leave inheritances for their children, according to a report released Monday by U.S. Trust, Bank of America’s private wealth management division. Among baby boomers, that percentage rises to about 45%.
The top reason respondents cited for not leaving money to their children was that “each generation should earn its own wealth.”
One in four respondents said they would rather give that inheritance to charity, while more than one in four said they worked hard for their money and plan to enjoy it themselves. A small slice, 7%, said they don’t think they will have any money left to leave for future generations.
Other reasons people gave were that they need the money to fund their own health care, they would rather invest money in their children while they’re growing up, their children will have enough money without an inheritance or they want to use their money “to solve difficult social problems.”
And then there are people who will give a little money to their children — but not their entire estate.
Glenn Walker, a 65-year-old from northern Kansas who took the survey and falls into the high net worth category, said he plans to leave “something” for his two children. But because he and his wife have both worked as teachers for years and want to help the education system, he said most of the money will probably go to scholarship funds at local high schools and colleges.
“They will inherit something, but both children seem to be doing fairly well,” said Walker. “And I think they — and we — all believe that if you’ve made your money here in the American system and you love this country, it’s okay to share some of that wealth with others outside of your family.”
Of the survey respondents who do think it’s important to leave an inheritance for their children, most say it’s because they feel it’s important to preserve their family’s wealth and to positively influence the lives of their children after they pass away.
And they have a lot of wealth to decide what to do with. About 37% of the 642 respondents have between $3 million and $5 million in investable assets other than their primary residence, 31% have between $5 million and $10 million, and 32% have at least $10 million. The study classifies people with $3 million or more as high net worth individuals, and those with $10 million or more are considered to be ultra-high net worth.