Do you include future inheritance projections as part of your financial planning?

[faleroy]

I stand to inherit money from my family. Most people do. I don’t know how much exactly or when as things change in the future, but even a few thousand dollars is enough to make me feel more comfortable about my financial future.

Of course I’d like my family to be around as long as possible, but I want to proactively anticipate a different financial future. Too many people post on here “I inherited $X from X what do I do?” and I want to avoid a situation where I’m not prepared.

 

[elijah3in1]

@faleroy I assume I will inherit zero. Long term health issues could bleed your family members dry, they could rewrite the will to leave everything to the pool boy, who knows. I assume I will inherit something, but I would never plan my retirement around it. I use the same approach with social security.

 

[loveandtruth28x]

@elijah3in1 This is what my fee-based financial planner advised.

If the inheritance ever materializes, great. If it’s all spent on end of life care, no problem because I wasn’t counting chickens before they hatch.

 

[mkelly1075]

@faleroy

Most people do.

I would definitely not take inheritance into account for financial planning purposes unless the money is already in an irrevocable trust with you as the beneficiary.

Otherwise, there is way too much uncertainty for both time and amount for you to plan around that money.

 

[yjsrajan]

@faleroy Most people do? Where’s the data backing this up?

Cries in generational poverty. Neither of my parents or other family members can afford to leave me anything, so no. All my financial projections involve income that I alone earn.

 

[monavierose]

@yjsrajan My thoughts exactly. What type of life did OP grow up around to assume that most people will receive an inheritance? A quick google search states 70-80% never receive any inheritance.

 

[clay9000]

@yjsrajan I had a nice laugh at that first line too lol only thing I inherited was trauma.

 

[jesusfreak010]

@faleroy I assume nothing for inheritance. There is a high possibility of the money being needed to pay for long term care, in home health aids, large medical bills etc.

Better to assume nothing then run the risk of coming up short for my own retirement

 

[realmia]

@faleroy I might end up with something but I told my parents I don’t expect one and that in my opinion they should spend everything they earned.

Like SS, it’s in no way apart of our future financial planning as of today.

 

[serge546]

@faleroy To me, inheritance is like winning the lottery, you don't know when and you don't know how much and in the long game, nothing is certain. Do I count future lotto winnings in my formula, No. Unless it's in my hand I don't count it.

 

[safewiththelord]

@faleroy Walking through dementia with my mom and the cost of care!!!!, …..do your loved ones have long term care insurance? My mom has a really good long-term care policy, but they still have to pay half of it out-of-pocket. Late in life medical or care costs can quickly deplete an estate in a very short amount of time.

They have a substantial estate . …But I don’t know where things will land when both have passed on. Based on their age, cost of care, and other factors, it’s possible I will get around $1m-2m. I’ve had conversations with my spouse about how we might prioritize any funds that come to us later in life, but it will be treated as a bonus to our long term plan, I can’t count on it. In general, we have game plans for how we would prioritize extra funds – work bonuses, larger than expected tax returns, etc. No need to wait for an inheritance to think ahead. Costs nothing to hypothesize what you might do. Just have flexible expectations

On a related note, if you have the kind of relationship with your parents where you can have open conversations about finances, it can be a real blessing. We’ve been able to put together a family estate plan and have everything buttoned up so that there is a smooth and seamless transition of accounts/property/assets and it is clearly documented what their preferences are for all things. All the legal stuff is taken care of (advanced directives, power of attorney, funeral planning).

 

[joelashley]

@safewiththelord This. So much this. My parents were the same. As traumatic as their passing was, everything went smoothly because they had everything, and I mean everything planned out. We did inherit a significant amount, but we planned as if we were getting nothing. In fact, we would have gladly spent it all to have my parents safe and well cared for in their final years.

 

[phil12job]

@faleroy I have pretty financially conservatives parents who have done good end of life planning to make their money last and my dad was successful in his career. I expect I will have some level of inheritance but I do not factor it in or rely on it. For starters, my dad plans to live to 100 and I hope he does. You never know when that money will come or what outside factors could happen. Maybe they need a ton of care at the end, maybe they fall for a dumb scam, maybe the market crashes or something catastrophic happens. I don't want to be in my 60's or older (hopefully) and banking on cash that doesn't materialize. Worry about it when (if) it comes. Learning how to manage a windfall is a champagne problem.