Giving Your Kids a Living Inheritance? Why It Might Be Necessary With Today’s Cost of Living
Written by
Cynthia Measom
Edited by
Joe Evans
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Depending on their goals, wealthy parents or grandparents may opt to give a living inheritance instead of waiting until they die to pass on their assets.
Dana Blue, Esq., an experienced estate planning attorney at Dana Blue Law, explained that a living inheritance — also known as an accelerated inheritance — means giving some of your money or assets to your family while you’re still alive, rather than waiting until after you’re gone.
“It’s like helping them out when they need it, whether it’s for buying a house, starting a business or paying for education,” she said.
Understanding more about why a living inheritance may be helpful to your loved ones and its pros and cons helps you decide if it’s the right choice for your financial planning.
Are More People Opting To Give a Living Inheritance?
“In my job as an estate planning attorney in Philadelphia, I’ve noticed more families considering this option lately,” Blue said. “With today’s high costs of living and uncertain economic times, many people see it as a better way to provide financial support when it can make the most difference. It’s about directly impacting and easing financial worries during important milestones.”
“Several factors contribute to the growing necessity of living inheritances today,” said Marty Burbank, an expert in estate planning and elder law and owner of OC Elder Law. “One key reason is the rising cost of living and education expenses that younger generations face. Additionally, witnessing their descendants benefit from their financial support and ensuring that assets are transferred tax-efficiently are strong motivators for benefactors.”
Why Might a Living Inheritance Be More Necessary Now?
“Many younger people today face tough challenges like student loans, high housing prices and a competitive job market,” Blue said. “A living inheritance can give them a real boost right when they need it most, which a traditional inheritance might not do until much later. It’s a way to support your family’s dreams while you’re still here to see how your gift changes their lives.
Blue offered a scenario where a living inheritance might be useful: a child graduating from college with honors burdened with massive student loan balances. “A living inheritance could help wipe out that debt and let them breathe a little easier as they start their career,” she said.
“Or maybe your grandchild dreams of launching the next big tech startup but needs seed money pronto,” she continued. “A living inheritance isn’t just a nice gesture — it’s a lifeline that can make a real impact when needed most.”
Pros and Cons of Living Inheritances
Blue said that a living inheritance is like getting a sneak peek at your inheritance before the main event.
“On the bright side, it means you can see the smile on your loved one’s face when they use your gift for something awesome, like buying their first home or starting a business,” she said. “It’s instant gratification for both the giver and the receiver.”
However, like everything in life, living inheritances have their disadvantages.
“Too much too soon could cramp your style financially, so it’s crucial to balance generosity with your own future needs,” said Blue. “Plus, there are tax implications to juggle.”
Besides mentioning tax implications, Burbank also added other disadvantages: the depletion of the benefactor’s own retirement funds, and the risk of family disputes if the inheritance distribution is not perceived as fair.
Final Thoughts
“In a nutshell, a living inheritance can be a powerful way to share the love and support your family’s dreams, but it’s wise to plan carefully and consider all the angles,” recommended Blue. “You want it to be a gift that keeps on giving — not one that causes stress down the line.”
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