Will My Children Inherit Too Much?
If you worry about how your children will handle an inheritance, you're not alone. Luckily, you have options — from lifetime gifting to trusts — that can help.


Some parents worry that leaving too much money to their children could hinder their growth or well-being. But what constitutes “too much” is deeply personal.
For some, it’s about fostering a strong work ethic; for others, concerns may center around reckless spending, substance abuse or values misalignment. Since no two families are alike, estate planning requires a tailored approach.
Lifetime gifting
One practical way to manage inheritance is through lifetime gifting. The annual gift tax exclusion allows individuals to transfer up to $19,000 per person in 2025 ($38,000 for married couples) without tapping into their lifetime exemption. Annual exclusion gifts can be in the form of cash, stock or other assets.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you’d like to gift additional funds, you can dip into your lifetime exemption, which in 2025 is $13.99 million per person or $27.98 million per married couple.
In addition, you can also make payments directly for things like education and medical expenses, which don’t count against the annual exclusion or the lifetime exemption.
Gifting during your lifetime also allows you to observe how your children handle money. Do they spend it responsibly or splurge on luxuries?
One of our clients helped both of his adult sons purchase homes, despite differing financial circumstances. He gifted them equal amounts but was initially concerned that his son in a lower-cost city would receive “more than he needed.”
A candid conversation helped set expectations, ensuring the son appreciated the gift without viewing his father as an unlimited source of funds. This approach balanced fairness with financial boundaries.
Irrevocable trusts: The basics
For those who want more control over wealth distribution, irrevocable trusts offer a structured approach. There are many types of irrevocable trusts, so we can start with the basics.
It’s possible to set up an irrevocable trust during your lifetime or as part of your estate plan at death, and control how and when the assets are distributed. A trustee manages the assets for the benefit of designated beneficiaries according to the trust's terms.
Assets in the trust are generally protected from creditors. These trusts allow you to dictate when and how assets are distributed, improving long-term financial security for your heirs.
While irrevocable trusts provide structure, they also limit flexibility, making it important to consider provisions that account for future changes.
Incentive trusts
If you want to guide, rather than dictate, how your children use their inheritance, incentive trusts offer a middle ground. These trusts set conditions for distributions, such as achieving a certain income level, completing a degree or maintaining employment.
While they can reinforce positive behaviors, overly rigid restrictions risk causing resentment or becoming impractical over time.
Some trusts include stipulations around personal choices, such as religious practices or lifestyle decisions, but enforcing such provisions can be legally complex and emotionally fraught. Ideally, the objective is to encourage positive behavior, not micromanage or control every event.
The pitfalls of overly restrictive planning
While protecting wealth is important, too much control can backfire. One client inherited a sizable sum but was limited to withdrawing just 4% per year from an irrevocable trust.
Despite earning a decent salary, the restricted distributions weren’t enough to cover his family’s modest remodel of their home. The client ended up resenting his late mother for not believing in him to responsibly handle the inheritance.
This example underscores the importance of considering real-world financial needs, future inflation and potential lifestyle changes when building restrictions into irrevocable trusts.
Other vehicles
Many parents are happy to be generous with children and grandchildren if gifts are used for education. Add a 529 plan or plans to your gifting legacy as a means of building educational value for successive generations.
A 529 is not a trust, but it is a tax-free vehicle as long as funds are used for education expenses. We worked with a client who chose to fund 529 plans for his children, grandchildren, as well as his cousin’s children.
A dynasty 529 plan allows wealth to be transferred tax-efficiently while growing tax-free for future educational expenses. These plans can be passed down to children and grandchildren, helping families combat rising education costs while maintaining control over the funds.
Trust-owned 529s provide additional flexibility, allowing the trustee to change family beneficiaries and oversee additional contributions.
While tax implications may arise when changing beneficiaries or ownership, a dynasty 529 plan acts as a powerful tool for preserving wealth and reinforcing a lasting commitment to education.
Communication is key
We encourage clear, open conversations around wealth transfers. If you have specific concerns about your children’s financial habits, discussing your intentions in advance can help prevent misunderstandings and resentment.
Ultimately, your legacy is about more than money — it’s about how your loved ones think and feel about you when you’re gone.
With thoughtful planning and honest communication, you can create an estate plan that supports your children’s success while preserving family harmony.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Mallon FitzPatrick leads Robertson Stephens’ Wealth Planning Team and delivers comprehensive wealth planning solutions for high-net-worth and ultra-high-net-worth clients. He collaborates with clients to develop a strategy that integrates tax planning, risk management, philanthropy, liquidity and balance sheet management, estate planning and investments. Ultimately, the client is provided with a cohesive wealth plan that helps increase the likelihood of experiencing good outcomes, meets their objectives and aligns with their preferences.
-
Five Tips For Estate Planning in 2025
We're almost halfway through the year. Is your estate in order? If not, here are some tips to get it done in 2025.
By Donna Fuscaldo
-
Is it Still a Good Idea to Give Savings Bonds as Gifts?
Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
By Alexandra Svokos
-
Five Tips For Estate Planning in 2025
We're almost halfway through the year. Is your estate in order? If not, here are some tips to get it done in 2025.
By Donna Fuscaldo
-
Is Giving Savings Bonds as Gifts Still a Good Idea?
Kiplinger editor explores if it's still a good idea to get savings bonds as gifts for children, looking at their returns and usability.
By Alexandra Svokos
-
How to Access Your Parents’ Medicare: Enroll and Manage Their Care
Getting access to your parents' Medicare or Medicare Advantage accounts is easiest when they're healthy. But you still have options if they are incapacitated.
By Donna LeValley
-
Don't Veer Off Course at the First Sign of a Squall in the Markets
When markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
By James Martielli, CFA®, CAIA®
-
How Business Owners Can Prepare for a Terminal Diagnosis
The most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.
By H. Dennis Beaver, Esq.
-
Advisers, Take Note: How 2025 Social Security Changes May Impact Your Clients
What financial advisers might need to know to help their clients navigate Social Security in 2025.
By Jake Klima
-
Stock Market Today: Have We Seen the Bottom for Stocks?
Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
By David Dittman
-
Social Security Is Taxable, But There Are Workarounds
If you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
By Todd Talbot, CFP®, NSSA, CTS™