Tuesday, April 6, 2021
Megan is a "farming heiress." Her mom grew up on a wheat farm and the government had been paying her family $15,000 a year to not farm in order to keep the land from being overused. Megan and her mom would receive the money in the form of a yearly gift.
In 2019, Megan's mother died and now she receives that money directly. Unfortunately, according to Megan, her mom was not great at money management, something she says she inherited from her mother.
Megan ended up with $50,000 from her mother's estate, which she used to pay off debts. Although Megan is grateful to have received anything from her mother's estate after a "life of financial struggle," $50,000 is not much in the current economic setting.
Inheritance is something that will typically come at a terrible time—after the death of a loved one. Conversation surround inheritance is becoming more and more relevant due to the expectance of a great wealth transfer.
Forbes reports that $30 trillion will transfer from the boomers to the younger generations, while PNC says the amount will be $59 trillion by 2061; CNBC reported that $68 trillion will transfer over 25 years.
Wealth transfers can come in many forms; monetary gifts with no limitations, tuition payments, loans, just to name a few.
Given the large, and soon coming generational transfer, it is important to consider and discuss the implications of inheritance.
See Meredith Haggerty, The impact of inheritance, Vox, March 23, 2021.
Special thanks to Naomi Cahn (Harold H. Greene Professor of Law, George Washington University School of Law) for bringing this article to my attention.