Is Inheriting Your Retirement Plan?

Thomas William Deans Ph.D.
April 9, 2024
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The Great Inheritance Tsunami isn't coming - it's already here and it's in full swing. Everyday  an estimated $3 Billion is inherited in the US and about $300 million by Canadians. Much of this wealth is creating surprises on the up-side and to the downside among family who were waiting for an inheritance -- and to be clear, there are a lot of waiters.

When I wrote Willing Wisdom in an effort to explain why 125 million US and Canadian adults do not have a legal will, I offered a process to get people thinking differently about their estate plans. Eleven years later, that number has ballooned to roughly 158 million. One friend suggested that maybe, I ought to stop writing books on the subject -- I removed him from my will.

Joking aside, the base population growth of both countries explains the rise, but I've come to understand that there is a significant swath of the population who will simply never get their affairs in order, because family are simply not a priority for them.  For healthy, kind, decent people, this conclusion can feel harsh, inaccurate, even implausible.

In my third and final book in my Family Wealth Trilogy, I try to inform a generation who is counting on an inheritance to wake-up to the possibility that one may simple never materialize.

The Happy Inheritor is the first book to connect estate planning to the study of personality disorders. It gives advisors and family members a basic tool to explore whether someone in their family -- someone we might describe as difficult -- will cause problems with the inter-generational transfer of family wealth.

As I conducted research for the book, it quickly became apparent that the most heartbreaking stories were coming from people who learned late-in-life that their parent or grandparent was mentally unwell and that estate plans were being altered to dis-inherit them. People who had made assumptions about inheriting had often done insufficient investing and savings themselves and had simply run out of time to repair their own retirement plans.

Sadly, tens of millions of people who are fully expecting to receive an inheritance, will learn late in their life that they'll receive nothing, or something materially smaller, because something changed, because something in their family dynamics changed.

Consider a person with a sibling with Narcissistic Personality Disorder (NPD) who nefariously manipulates their parent to revise their will leaving everything to himself. Or the grandparent diagnosed with Avoidant Personality Disorder who generation skips over his or her own adult children leaving everything to their grandchildren. Or the parent with Borderline personality traits who remarries late in life and alters their will leaving everything to his or her new partner. Or the parent diagnosed as Schizoid who suffers from addiction and makes bad investment decisions or lies to themselves and their family about how much wealth they actually have.

An estimated 30 million US and Canadian adults suffer from one of the 10 medically recognized personality disorders listed in the Diagnostic and Statistical Manual of Mental Health 5 - commonly referred to as the DSM-5.

Not all late-in-life changes to someone's estate plan stem from personality disorders. Some people who are desperately banking on an inheritance are underestimating the nefarious charm of a much younger caregiver working his or her magic on a much much older family member who is living alone.  Or the elderly parent who claims that they have a will, but it later turns out to be a holographic will so badly out-dated that not only has their executor died, but so too have a few named beneficiaries. There is no end to the late-in-life surprises that are materially affecting the slam dunk inheritance. Topping the list -- we are living longer and care-giver costs have exploded thereby reducing the value of estates - in some cases to zero.

Here is the first take-away. No matter your age or level of wealth, work with an advisor to begin your own investment /savings/ retirement plan. If all goes well you will inherit and be in a fortunate position to consider transitioning wealth to your own heirs -- ideally while you are still alive (the subject of another article).

The second take-away -- we know that successful families are open to working with an advisor to gather for a family meeting to discuss wealth transfer plans slowly and carefully over time. Successful families use their wealth to bring families together to build trust and mutual respect. They do not use their wealth to control and divide family relationships. These family meetings are where time and resources are being spent preparing heirs.

If the idea of working with an advisor to hold a family meeting seems appealing, pick up a copy of The Happy Inheritor.  The book will show you how to find an advisor who takes estate planning seriously, and who is equipped to help your family gather and talk about the last taboo - it's not politics, sex or religion - it's money.

Order your copy of The Happy Inheritor