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7 Unexpected Ways an Inheritance Can Harm Your Kids (And What To Do Instead)

Address inheritance issues now before they become a burden for your children.

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Updated Oct. 21, 2024
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When writing a will, it can be tough to decide where your assets should go.

Many of us hope to leave money, property, or other assets to our children to help them eliminate some money stress after we die. But can the decision to leave an inheritance backfire?

Here are some reasons to rethink your plan to leave money to your kids.

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It can drive a wedge between siblings

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If you have more than one child, it can be hard to decide who should get which items and how much each child should get. After all, you might have only one asset, like a home or car, to give away.

Be careful about how you handle these assets, as the wrong moves can hurt your children’s relationships with one another and cause hard feelings.

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It can ruin their ambition

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One of the nice things about earning and saving money during your lifetime is that you will be able to help your kids with some extra cash when you are gone.

But large amounts of cash can also ruin your kids’ ambitions, especially if they come into a large inheritance at a young age.

It can cause them to spend foolishly

Adobe/Farknot Architect A woman holds three credit cards in her hands.

When a child gets a big inheritance, it can be tempting to run through it quickly. That could negatively impact your child, who might blow the money within a short period after your death.

Fortunately, there are ways to reduce the flow of immediate cash after you die. So, it may be a good idea to talk to an estate attorney about what you can do to set up your estate to account for any concerns you have.

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It might increase their tax bill

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As you put together your will, factor in potential tax issues for your kids so they won’t have the burden of addressing them.

Make sure you are aware of whether you live in a state that taxes inheritance and review the limits of how much your kids can inherit before it is taxed.

If you don’t account for tax issues now, you might set up your kids for failure later.

It can cause unnecessary complications

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Estates can be complicated, and there are things you might do that make the situation worse.

For example, assigning one of your children as the executor of your estate can cause headaches and even resentment among the rest of your kids. Remember, your executor doesn’t have to be one of your children.

It might cause them to keep an asset or property they can't maintain

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Some assets — ranging from homes and cars to art — can be a pain to protect and maintain.

So, think about how you want to distribute those assets and whether there are other options for your valuables instead.

It may cause your loved ones to resent you and your memory

Daniels C/peopleimages.com/Adobe tired man

You probably want loved ones to remember you fondly, but a big inheritance can cause some folks to resent you. That is especially true if they feel like they didn’t get their fair share.

Set your estate up for success by being cognizant of how your decisions will affect those you leave behind.

What to do instead: Financial assets

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An attorney or other expert can help you craft a better plan for your monetary assets.

If you are worried about your children spending all their inheritance right away, set up a trust. That way, you can establish the rules now so your money can be properly managed after your death.

What to do instead: Physical assets

Andy Dean/Adobe home for sale sign

Consider adding instructions to your will now to create a plan for physical assets, such as a car or home.

For example, you might instruct your children to sell the asset and split the profits, donate the asset to a museum, or give the asset to one child while giving the monetary equivalent to your other kids.

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What to do instead: Charitable contributions

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If you have a charity that is dear to you, consider setting up your estate to help the venture.

Think about donating money from your estate to charities rather than having your kids inherit it. Doing so can eliminate the counterproductive impact that an inheritance can have on your children.

Bottom line

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It can be tempting to leave an inheritance to your kids. But perhaps it is better for them to build wealth on their own.

Whatever you decide, make sure your kids understand the plan before you die. That way, you can address any issues now so they don’t become a problem after you are gone.

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Author Details

Jenny Cohen

Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.