Two-Thirds of Millionaires Worry Large Inheritances Could Harm Their Kids: Survey

By Tom Ozimek
Tom Ozimek
Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'
September 20, 2021 Updated: September 21, 2021

A recent survey of high-net-worth individuals found that around two-thirds of them were concerned about leaving too much money behind for their children, while 57 percent of those who don’t plan to pass on an inheritance cited President Joe Biden’s tax plans as a factor in their decision.

The Motley Fool polled 2,000 individuals with a net worth of more than $1 million about their attitudes toward inheritances, with 67 percent expressing concern about leaving too large of an inheritance.

The top worry (58.74 percent) was that their heirs would use the money irresponsibly. Other concerns included beneficiaries not being prepared to manage a large inheritance (56.54 percent), fears that receiving large sums of money would make them lazy (55.77 percent), and nearly 55 percent of respondents worried that large inheritances would draw undue attention to beneficiaries.

Respondents were able to choose multiple answers, so the percentages don’t add up to 100.

More than two-thirds of the polled millionaires with plans to leave an inheritance said they intend to require heirs to meet certain criteria—such as academic achievement—before the inheritance is received, while 64 percent said they’re mulling generation-skipping trusts that would see the funds go to grandchildren.

More than 56 percent of high-net-worth individuals polled by The Motley Fool said they thought the assets could be put to better use—such as charity—while 66 percent said they plan to leave at least some of their estate to charitable causes.

Overall, around 85 percent of the polled millionaires said that it’s somewhat or very important for them to leave behind an inheritance, though the percentage differed by generation. Millennials (82 percent) were most likely to express the sentiment that bequeathing money is an important financial goal, followed by the silent generation (76 percent), Generation X (63 percent), and the baby boomers (57 percent).

Of the high-net-worth individuals who said they don’t plan on leaving behind an inheritance, 57 percent cited the Biden administration’s proposed tax changes as one of the factors driving their decision.

In order to fund his $3.5 trillion spending plans, Biden has floated proposals for various tax hikes for individuals, estates, and corporations.

On Sept. 13, the House Ways and Means Committee released key information on proposals for tax law changes (pdf), including the reduction of the estate and gift tax exemption and subjecting grantor trusts to estate tax. Other proposals include imposing a time limit for generation-skipping trusts and increasing the estate and gift tax rate from 45 percent to 65 percent for some large estates.

“Given the historically high gift and estate tax exemption amounts and risk that Congress will reduce them, now may be the perfect time to make gifts to loved ones,” Gary Altman, founder and principal attorney at law firm Altman & Associates, wrote in a recent note.

Tom Ozimek
Reporter
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'