What Inheritance?

Jacqui Kenyon
Posted

inheritanceAre you expecting an inheritance from your parents? The family home, maybe, or a chunk of money to put toward your nest egg or your kids’ college funds?

According to new research, few Americans would answer “yes” to this question.

The survey—compiled by Interest.com—reveals that only 27% of respondents between the ages of 18 and 59 expect to receive an inheritance from any family member.

Young people, in particular, tend to be pessimistic about their inheritance prospects: “Younger people tend to be perhaps too conservative in estimating whether or not they’ll get an inheritance because they don’t want to think about it,” Mike Sante, managing editor of Interest.com, said in the report.

Unsurprisingly, this dismal outlook is likely a result of the economic downturn and recession—households lost $16 trillion in net worth from third quarter 2007 to first quarter 2009, according to the Dallas Federal Reserve. With so many families losing so much, Americans just don’t think there will be much left to inherit once their relatives are gone.

RELATED: What Did Our Kids Learn From the Recession?

However, as TODAY reports, many experts say that people may be a little too pessimistic about their inheritance prospects. Derek Gabrielsen, a wealth adviser with Strategic Wealth Partners, said he believes that among those who expect to inherit nothing, about 50% will end up inheriting something.

“The baby boomer generation is, without question, going to be the largest wealth transfer in American history … from them to the next generation,” Gabrielsen told TODAY.

How People Would Spend Inheritance Cash

Sante said in the report, “Even a relatively small inheritance can make up for many years of living beyond your means or saving too little. It could be the ultimate financial ‘get out of jail free’ card for many families.”

Survey respondents are aware of this fact: Building up a nest egg and paying off debt were the two most popular responses when they were asked how they’d spend inheritance money.

RELATED: How I Squandered My Inheritance at Age 18

If you get an inheritance from a family member—expected or otherwise—how would your spend it?

  • Sara

    I wouldn’t spend it, I would invest it!
    I’ve been an avid saver in my work 401K and have put some money into a Roth IRA and a bit more in my kids 529 plans, as well as having some emergency savings. The next step is to put some funds in investment accounts that are not restricted as to use of funds or timing of withdrawal without penalty in the hopes of retiring early. Though I certainly hope my folks live long enough that they don’t pass their money to me any time soon.

  • Sasha

    I would save half, and use the other half to pay down student loan debt. Unfortunately I actually *won’t* get an inheritance because my parents actually are poor. They can barely pay their mortgage now, and I often send money home to help out even though I’m not stable myself.

    People underestimate the value of generational wealth, no matter how small. I have friends with no student loans because their grandparents died and left a modest chunk of change. In their eyes it’s no big deal, but a lot of people would kill to have a fresh start after college with no debt! Not to mention the financial well-being and savings. And guess what? If my friends are smart, the money that they could’ve been paying on student loans can go towards other things that build capital, and they can pass that down to their children and so on.

    Unfortunately, people who have parents and grandparents old enough to have been explicitly and systematically discriminated against in this country in areas like housing and employment know too well what it means to not expect much, if anything, from a family member’s estate, as they were denied opportunities to build the type of wealth that other families had access to. In fact, I am terrified that when my parents die, I will actually go MORE in debt, because their insurance won’t even be able to cover their funeral expenses!

    Luckily my parents did leave me with a fantastic sense of self determination and a great value system. Kindness, compassion and a sharp sense of social justice are things money can’t buy. No matter what our parents leave us with (or without) we must still make wise decisions for ourselves, and be a social force for good in our communities!