People have been talking about the greatest transfer of wealth in American history for the past few years coming in the next decade. Financial experts expect that over $30 trillion will be inherited by only 1% of the young adults in our country. Many of these kids have grown up with wealth and have people to help them manage their new wealth.
In addition to the wealthiest young adults inheriting a large sum of cash, many other young Americans will be inheriting a smaller amount of money and other assets in the amount of $10,000-$500,000. If you have a house and you pass away, there is a chance that your young adult will inherit this kind of money, and this inheritance may double or triple their current total wealth in some cases.
When learning about a windfall, many young adults make bad choices. My wife received a gift from her great-aunt, who passed away when we were in our twenties. Christae decided that she needed to purchase a big pink bathtub with the inheritance. For the record, she looks back at that decision and regrets that decision.
Do you want to create checks and balances to ensure your young loved one uses the funds in a specific manner? Do you want to delay when and how much they get at a particular time? Do you want them to have someone who serves as a sounding board on how the money is used? If so, you may want to consider creating a Trust so that it is not a one-time windfall.
Update on the pink tub. We recently saw our first house on the market, and yes, the pink tub was still in the place. At least it has gotten a lot of use.