To give inheritance or not

This is a very interesting and perhaps even divisive topic to talk about. While others dream of giving their offspring the best possible environment or even life, others want to instead temper and prepare them.

We live in a world where we get swayed and worry about other people’s opinions. We are also in the information age where we can access a part of other people’s lives through social media. What if you knew at a young age that you will inherit nothing while seeing others (friends/extended-family) who are well off & receiving their car, condo, house, passed-down fortunes, connections, assets, businesses, ..etc.. and you are left with nothing?

That’s going to be frustrating for sure. You will question your parent’s motive by declaring that you will inherit nothing. Why would other families give their children economic advantage and others not?

Each person’s circumstances are different, even unique. There is no moral obligation to leave a cent to the next generation. But on the other hand, there are some people who struggle each day to make ends meet who only wish they could leave an inheritance.

It gets trickier

On paper, it is certainly easy to just declare to give equal inheritance to children through a life insurance policy. But not all children are ‘equal’ in terms of circumstances once they become adults. As a parent, you will see this and will somehow lean towards giving unequal inheritance, because:

• One child is already wealthy and good at money

• Perhaps a child is disabled or have special needs

• Another has multiple marriages and children

• One child is estranged or have lots of debt

• One child suffers from chronic disease

• One child that is really bad at money

Now, there’s an inheritance law to follow at the minimum but you can always plan around that.

Alternatives to the typical Inheritance path

Leaving your children without inheritance can:

• Temper their mindset, while their friends are ‘living’ their lives, they can save & invest early

• The sacrifice of social life & the like leads to gaining ‘financial powers’ of a financial foundation, grit & discipline and ability to live below one’s means

• They gain wisdom to understand the difficulty of earning money and the limits of it when it comes to happiness

If you want to give inheritance, then consider:

• Tie distributions with ages and events instead - Don’t give it all at once.

• Giving them a series of financial test - If they can really manage or squander the money you worked hard for.

• Give without giving cash - You don’t have to give inheritance in the form of cash or property. Directly pay down either an adult child’s mortgage principal or school loans. Or give them financial knowledge & wisdom to keep & grow money. This will make a significant difference to the child’s future financial position. A win-win approach for both.

As a parent, you want what is best for your children. It’s natural and reasonable to worry how a large inheritance will affect their drive and choices for life. With some planning, money can be a tool that enriches their lives rather than an anchor that drags them down.

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Special Thanks to KMC Solutions & GCash for sponsoring our Invest-in-Yourself-Talk last August 3!!

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Iggy Go, RFP®, REB, is a Public Speaker, Content Producer and  Author of the book

“A Lazy Investor’s Way”.