“I don’t believe in inheriting money,” CNN host Anderson Cooper recently told Howard Stern on Stern’s radio show. Added Cooper, a son of designer and heiress Gloria Vanderbilt: “I think it’s an initiative sucker. I think it’s a curse.” Well, that's certainly one man's opinion!
To leave an inheritance or not to leave an inheritance? In my experience, that's rarely an issue my client's struggle with. However, based on an article in Forbes recently, entitled “What Kind Of Inheritance Do You Owe Your Kids?”, it seems that the issue may be a troubling one. Really? My guess is that you have to be a member of the 1% in America to understand this – the rest of us worry more about whether or not we will have enough wealth to fund our way through retirement; we'd be delighted to learn that, in fact, we will have something left to give. Don't misunderstand me, I don't ignore the reality known as "affluenza'; leaving a legacy should never be viewed as an obligation. However, for me, the solution of how to avoid sapping our loved ones of initiative when leaving them an inheritance is found in the planning and starts with the parenting.
According to this article there has been a shift in American's attitudes toward inheritance partly by fiscal necessity in the wake of a global financial recession and partly a shift in values or beliefs:
"Only 46% of boomers believe it’s important to leave an inheritance to loved ones, according to a new survey by the Insured Retirement Institute, a retirement-income industry group. In the past, that figure was closer to two-thirds."
An important part of understanding Anderson Cooper's position on inheritance knowing the fact that he made news last month by being disinherited by his mother, Gloria Vanderbilt (yes, of those Vanderbilts). His response to this was a blitheful acceptiance of her estate plan. In fact, when asked ask about his views on inheritances as he made the observation of an inheritance: “I think it’s an initiative sucker. I think it’s a curse.” While there are examples of this, it are many more examples of the opportunity a well-placed inheritance can bring to a loved one: a leg-up rather than a hand-out.
The important thing is that either course requires some thoughtful planning. Our legal system is designed to make sure assets go somewhere when we pass on – someone has got to own it, after all – and so each state has a sort of statutory one-size-fits-all default that can come into effect during probate when there is no plan.
Whether you are or are not leaving an inheritance, the laws on the books will rarely dispose of your assets as you would have seen fit. Moreover, taxes and legal costs will mount during this inefficient process. A plan for your assets and for whatever you choose to do with them is simply of immense importance. And, with a little extra work, it can also be made to do a great deal of work. So what do you value and how do you wish to leave your assets? Will there be an inheritance and, if not, what is to be done?
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Forbes (April 14, 2014) “What Kind Of Inheritance Do You Owe Your Kids?”