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A record number of Americans can’t survive financially without an inheritance from their parents.

Rich Americans have hit a new level of spoiled rotten — or are just desperate for cash.

A recent poll of 1,000 “affluent” Americans concluded that a third couldn’t live without their parents’ inheritance, according to investment firm Merrill Edge. That number jumps to 63 percent among 18-24-year-olds.

“We’ve never seen such a strong reliance on receiving an inheritance,” says Aron Levine, head of Merrill Edge. “The key to financial freedom is outlining and following an action plan for short- and long-term goals beyond an inheritance — which may or may not ever come.”

Most Americans don’t have a plan to transfer an inheritance

Determining your financial stability on a windfall of cash from a loved one may not be the wisest choice. And like Levine says, what if you never receive that inheritance?

Most families don’t talk about how their older relatives’ wealth will transfer to the next generation when they die anyway. In fact, only 37 percent of inheritors spoke with their benefactors about the wealth they would one day receive from them, says a study from RBC Wealth Management. And only 30 percent of benefactors had a plan to hand down their estate to the next generation.

An estate plan is a preparation of moving one’s assets over to their surviving family members after their death. The family will need to settle their estate taxes, which typically involves an attorney with a background in estate law.

“Discussions around estate and succession planning can be emotionally charged, so families tend to shy away from them,” says RBC VP Bill Ringham. “But for families that want to leave a legacy and ensure the nest egg they have built is protected across generations, communication and planning are key.”

Another study, this one from Fidelity investments, found similar results. Parents seem to think they’re comfortable speaking with their kids about leaving an inheritance, but their kids say different. Seventy percent of parents say they’ve talked to their kids about what to do when they die. However, more than half of children disagree.

“When it comes to legacy planning, generally speaking, the sooner the better,” says Fidelity executive Kevin Ruth. “Failing to have an estate plan in place can lead to significant family confusion once a beloved family member passes. Too often, it may result in costly mistakes or the wishes of a loved one’s estate and legacy plans going unfulfilled.”

Wasting the family fortune

Within the next four years, the older generation will turn over $4 million in wealth to their kids and grandkids.

At least so says an Ohio State University researcher, Jay Zagorsky, in a 2012 study. He also predicts Americans will only save about half of that money. The other half will end up donated, spent, or just wasted.

Even more alarming, a more recent study from Zagorsky says 30 percent had negative savings two years after receiving their inheritance.

“Many families have not saved enough for retirement or their children’s college education,” the study says.  “Inheritances can help make up these shortfalls. Families that primarily spend the money will boost their current enjoyment and consumption but will not improve their financial situations.”

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Joe Pye

Joe Pye

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Pye is the associate editor of



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