5 key tips to plan for potential inheritance

PennyWise: Personal Finance & Travel Tips

Gen Z and Millennials stand to inherit a significant amount of money and propert in the future as family members age. On the latest episode of PennyWise, producer/editor Ambre Moton is joined by NerdWallet's Kimberly Palmer shares tips on how to ensure you're well-prepared for any future inheritance.

Read more on NerdWallet here!

About this program

Nat Cardona is host of PennyWise as well as Lee Enterprise's true-crime podcast Late Edition: Crime Beat Chronicles. Lee Enterprises produces many national, regional and sports podcasts. Learn more here.

Episode transcript

Note: The following transcript was created by Adobe Premiere and may contain misspellings and other inaccuracies as it was generated automatically:

Welcome to PettyWise, A Lee Enterprises podcast. I'm Ambre Moton, the producer and editor filling in for Nat Cardona, surreally associate, a Boston based research and consulting firm, so that over $80 trillion in wealth will be passed to millennials and Gen Xers via inheritance from parents and grandparents between 2021 and 2045. That is a pretty mind boggling amount, particularly when you consider that they anticipate that less than half of that volume is expected to come from high net worth households to discuss how to prepare for potential inheritance.

NerdWallet personal finance expert Kimberly Palmer's joining me. Kimberly, let's talk about potential inheritance. If someone knows they're going to leave anything to their kids, grandkids, just any relatives or friends, what's the first step that everyone needs to take to get ready?

The first step is to talk openly about it. The last thing anyone wants is surprises or unexpected things to come up later when you no longer have the chance of talking about it. So basically, even though it can be kind of an awkward topic, talking about inheritance, you want to discuss that with your parents, your grandparents, and just talking about money generally can help make everyone feel more comfortable.

And I think it's important to note that this isn't just a conversation for the super wealthy, and that's because there is a massive transfer of wealth between the baby boomers, older generations, and then the younger generations over the coming 20, 30 years or so. And so it's something we can all be mindful of. It's not that everyone is going to inherit a ton of money, but it might be something like $1,000, $5,000, $10,000, any amount is worth talking about because what you do with it then is up to you.

Gotcha. When it comes to money, I know some families do find it difficult to have conversations about it, especially, you know, certain cultures. Is that something that can be kind of navigated?

Absolutely. One thing I heard over and over again from financial advisors who work with clients on this topic is that basically every family is different and you want to be really sensitive, especially if you're, say, your parents or grandparents are just resistant to talking about this topic of money. You don't want to ambush some or make them feel uncomfortable, but you want to set aside a time in advance, say, hey, we're all going to be together for the holidays.

For example, why don't we talk about money? Talk about your expectations, the future, what the future holds. If you need any help managing your money. If there's something I can do to be of assistance to you, all of those conversations can be difficult. But if you set aside a time so everyone knows to be prepared to talk about it, that can really help.

And the article said that you should make sure that the money is safe. What does that mean?

Well, unfortunately, among older adults, we see a lot of fraud and scam artists actually targeting older adults. And that's for the simple reason that older adults hold so much wealth. So from a scam artist perspective, they make a really good potential victim. And so we want to help protect our parents and grandparents from all of that. And even just talking about the risk of scams and being open about it can help everyone protect themselves.

Now, my grandfather there has definitely a few years ago started getting a lot of those phone calls. So that's been a fun thing to navigate with my mom and my uncles of my grandfather.

That is so, so hard.

There are some depressing statistics about lottery winners going broke, for example, and sometimes I think an inheritance can feel like winning the lottery. Are there any tips on what people can do so that they're not one of those statistics?

Definitely. And actually, the first thing to consider doing, if you're lucky enough to to get an inheritance, is to think about what is really important, your overall financial picture. And that might mean paying off any debt that you've accrued. Building up savings. And then you can think about more fun things like maybe if you have dreamed of buying a home but haven't been able to.

Or something like that. Or even a vacation, A family vacation. Something that you've really wanted to do for so long but haven't had the ability to do. So basically talking in advance with the person who might potentially leave you an inheritance can also help you incorporate their ideas and their wishes for what you might do with that money.

And why should people be counting on inheriting wealth from older generations?

Well, the challenge is that you really never know what's going to happen. And older adults often face a lot of big expenses later in their life that are hard to anticipate. For example, health care costs could come up later in life that you didn't really fully realize the impact of or the expense of. And so you don't ever really want to count on that money.

But that doesn't mean we can't talk about it and plan and have those conversations.

Was it definitely all great tips? Everybody can go to Nerdwallet. We have a link at our show notes that you can read the article if you want even more details. Thanks, Kimberly!