It is our instinct to avoid awkward talks. Parents frequently emphasize having conversations with their children about health and personal safety, although it can be difficult to tackle sensitive themes. However, something that is equally essential, though sometimes overlooked, is discussions about financial health. This includes “the inheritance conversation” among wealthy households.
According to data from the Resolution Foundation, the inheritable wealth of individuals between the ages of 20 and 35 will quadruple over the next two decades, hitting an all-time high in 2035. The greatest limitation is that the average age at which most individuals would benefit is 61.
This mega transfer of wealth will further entrench societal inequality in our lifetimes, according to the report; people tend to marry those with similar financial backgrounds, and more than 80% of millennials who already own a home have parents who are homeowners, whereas nearly half of millennials who do not own a home have parents who do not own a home.
For many, then, this news will have no impact at all. According to the analysis, around one-third will have no property wealth to inherit, and those of us who have will discover it far too late to ease life’s two largest financial burdens: children and houses.
When should you discuss your children’s inheritance?
At age 10, you should start conversations with your children about financial planning and your estate plan. You don’t need to be explicit about your money, but educating them about your beliefs and the significance of prudent spending is a good idea.
By the time they are in their late teens or early twenties, your children should have a firm grasp on the difficulties of financial planning. You should then have a serious conversation regarding the details of your estate plan, such as how much they will receive, how they will receive it, what assets they will inherit, etc.
Discussing financial and estate planning with your children is crucial before they move out and begin accumulating their own fortune. Regardless of whether you desire to reveal the precise amount they will inherit, it is crucial that they learn what to do and what not to do with an inheritance. For instance, people should not attempt to keep property they cannot afford to maintain.
Discussing inheritance with your children should not be delayed. The sooner you discuss money with your children, the more financially secure they will be as adults. It is also beneficial to get your family acquainted with discussing sensitive issues such as estate planning so that you can debate any changes together.
By discussing estate planning with your children, parents, and siblings, you may guarantee that no one is caught off guard by unanticipated duties to fill, such as executor or power of attorney, or by other components of your estate plan.