As the baby boomer generation ages, they are increasingly spending a lot of their retirement funds on their children. This might have implications for their estates.
Due to demographic changes and changing economic fortunes, older Americans increasingly have to transfer money to their adult children to help support those children. Barron’s, in a recent article titled “Boomers Spend Their Kids’ Inheritance — On Supporting Them,” reports that interfamily transfers have increased significantly in the last few years.
The article is a good read for anyone interested in retirement and demographic trends.
For estate planning purposes, this trend could create some issues. For starters, if the money is being spent now, then it obviously cannot be part of the estate later and children might receive smaller inheritances than they are expecting.
What if one child receives more support from the parents while they were alive than another child? This could lead to bitterness and even fighting over the estate. This is likely to happen if the estate plan divides what is left between the children equally, even though one or more children received money along the way.
Parents who are helping to support their adult children now should speak with an experienced estate planning attorney about what that means for their estate plan.
No parent wants to leave a fighting family behind as their legacy.
Reference: Barron’s (June 26, 2015) “Boomers Spend Their Kids’ Inheritance — On Supporting Them.”
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