Are Your Heirs Prepared?

In the next decade, 15% of American adults expect to receive an inheritance, according to the latest findings from the New York Life Wealth Watch survey. But they’re not all confident they’ll be able to manage the funds. On average, adults who expect to receive an inheritance anticipate receiving $740,000. But just 42% feel very comfortable handling that new wealth. 

At the same time, a separate study shows while 90% of Americans know the importance of having a will, nearly 60% haven’t taken any steps to protect their loved ones.

What makes this survey even more alarming is that the lack of a will can be damaging to family relationships. In fact, 58% of respondents reported experiencing conflict, or know someone who has, due to the absence of an estate plan or will. 

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Confusion about writing will and receiving inheritance 

That nationwide survey by LegalShield, which provides pre-paid legal services, showed 46% of respondents admitting they didn’t know where to begin making end-of-life preparations, while 72% fear they can’t afford to make a will.

Women heirs responding to the New York Life survey are less confident than men, overall. Nearly twice as many women who expect to receive an inheritance (23%) feel uncomfortable managing their inheritance as men who expect to receive an inheritance (12%).

“We are still in a turbulent economic environment. Inflation and higher interest rates continue to make credit card debt a challenge, compounded by unexpected expenses and a lack of emergency savings. Even those who are set to receive an inheritance in the next 10 years do not feel entirely confident managing it,” said Suzanne Schmitt, head of Financial Wellness at New York Life. 

“The data show us that people continue to be focused on the basics — paying down debt, building emergency savings, and contributing to their retirement — but it can feel incredibly difficult to plan for longer-term goals like buying a home, growing your family, or retiring when day-to-day challenges are occupying your time and attention.”

According to the New York Life survey, 58% of those expecting an inheritance anticipate receiving it in cash, 43% expect to inherit property like a house, 28% expect investments like stocks and bonds, 24% expect proceeds from a life insurance policy, 21% expect jewelry or other family heirlooms, and 14% expect to inherit an annuity.

The top three ways people anticipate using their inheritance are: paying off debt (37%), supplementing retirement savings (35%), and preserving the inheritance with the intention of passing it down (26%).

Other LegalShield findings include the fact that 56% of those with a spouse or partner don’t have a will and 37% of adult children who know their parents have a will don’t know where it is.

Moreover, 22% with a will have never updated it and a potential harbinger of trouble ahead: 36% say there are surprises for their beneficiaries in their wills.

Note: A version of this item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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