An inheritance is not a right.
I have read with interest the claim that many baby boomers are spending their kids’ inheritance, becoming the biggest demographic of spenders in Australia despite the ogre of inflation restricting and crimping the rest of the population’s lifestyle habits. E
vidently, older Australians over the age of 65 are the biggest spenders, outlaying a small fortune on travel and food and wine. Perhaps they are spending up big after COVID, knowing that their potential travel life in particular has been seriously impacted.
Perhaps they can finally afford fine food and wine. The article I read was focused solely on finances without any judgment, except the implication that somehow the children have a de facto right to an inheritance.
Automatic right
It made me contemplate a few things. Firstly, here is an assumption that an inheritance is an automatic right for our children.
This is a contentious issue for many parents out there. Some of my friends are estranged from their adult children for a range of reasons. Some disapprove of their children’s lifestyle choices or their drug habits, and sometimes the rejection is reversed with the adult children refusing to have contact with their parents. Some friends, in consultation with lawyers, have drafted wills that leave some money to their children and even grandchildren, but the majority of it goes to charitable organisations.
One couple are leaving bequests for underprivileged students to complete university degrees. They are adamant that they wish their money to do good in the future and not be wasted by wastrels. All of these decisions have come after much hand wringing and deep emotional thought, and possible guilt. Not an easy decision.
And how do our children feel? There are probably many and varied responses. Some live in anticipation of a windfall and others decide to get on with their life and make a life not based on a predicted future amount of money, no matter whether big or small.
No doubt some live somewhere in the middle, knowing that one day they may be the recipient of money and this is a comforting cushion. However, as people are now living longer and healthier lives, that future windfall may be of little use in the struggle years of raising a family and paying mortgage debts.
Waiting patiently
Should they wait patiently in the wings for us to drop off our collective perches, and if the potential inheritance is large enough will that cause problems for them in the present? Many extremely wealthy individuals have decided to not allow their children to inherit millions or in some cases billions, believing that it will be a disincentive for the children to forge their own paths in life. Many wealthy Americans have chosen this path, leaving the majority of their wealth to charities or foundations that they have set up in their lifetime. Bill and Melinda Gates are a case in point.
But of course, the vast majority of us are not in the millionaire or billionaire category. We might look as though we are millionaires what with the insane price of housing, but that is an asset that needs to be lived in and is harder to liquidate and share the value without causing more social upheaval.
The sad bit of course is that someone has to die for that inheritance to happen. That is grim by anyone’s standards. Maybe that is why so many mums and dads are being the bank of mum and dad, wanting to not just help out but to see the rewards now rather than from some mythical seat in heaven looking down on the family financial decisions.
Have you given money to your kids? Why not share your experience in the comments section below?
Also read: Why I’m grateful to be a boomer
Absolutely agree, we get much joy from helping our children and grandchildren now, while we are alive. We give what we can every so often, when we can see that a small boost would make such a difference.
I told my parents to spend their money, as they didn’t owe their children anything.
We taught our children when young how to be fiscally responsible. Each of them have invested wisely for their future.