There are many possible scenarios that could lead to a wasted inheritance. Fears that this will happen appear to be on the rise, because in the next few decades the largest transfer of wealth from one generation to another will occur, as Baby Boomers pass away. However, there are a few simple things that can be done to prevent waste, according to the Wills, Trusts & Estates Prof Blog in "Will the Next Generation Squander the Largest Wealth Transfer in History?"
These things include:
- Talk to your potential heirs about the inheritances they will receive. Let them know how you would like them to manage it and spend it. Tell them why it is important to you that they handle their inheritances in a certain way.
- Do not focus on how much you will be leaving to your heirs. Focus on values and how handling the money properly can create a benefit for society. Leave a legacy in this way that is more than just a bank account.
- Use estate planning to prevent waste, by limiting how an inheritance can be spent and when.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include a plan to avoid wasting an inheritance.
Reference: Wills, Trusts & Estates Prof Blog (May 29, 2018) "Will the Next Generation Squander the Largest Wealth Transfer in History?"