Happy Like Macy

Ty A. Bernicke CFP® | Posted: May 17, 2019

The happiest animal to grace this planet is without question my yellow lab Macy. She is always excited to see anyone in her presence, she never holds a grudge, and she seems to love every human being she encounters. Other than being a little passive aggressive by retaliating if she doesn’t get her way, Macy doesn't have many character flaws. Unlike Macy, however, it seems to me that humans are a bit more complicated. While Macy may be happy and carefree at all times, we have all sorts of issues to worry about on a daily basis. One particular issue that unfortunately can create negative emotions in people is money.

Common Challenges Faced During and After an Inheritance

Some of the issues we have found to cause people negative emotions with money occur during the time when adult children receive an inheritance from their parents. Over time, I have observed three things to be some of the root causes of negative emotions when it comes to an inheritance:

Inheritance money tends to be spent significantly faster than money that has been saved for retirement.

Based on our observations, the old saying “easy come, easy go” could not be more true as it applies to adult children receiving inheritances. While we find that many of our clients don't feel this will be a problem for their children, this issue does seem to present itself quite frequently. In our opinion, too much money received too quickly can sometimes negatively impact people as it robs them of the irreplaceable satisfaction that a person gets when acquiring their money through good old fashioned hard work.

Many parents do not want their assets to go to their son- or daughter-in-law if their child gets divorced.

In addition to inheritances being spent quickly, another issue we have witnessed countless times over the years occurs after adult children receive an inheritance and then subsequently get divorced. If this scenario occurs and the children live in a marital or community property state they could risk losing their inheritance to an ex-spouse if the situation is not handled properly.

Adult children may miss out on many tax planning opportunities during the inheritance process.

The final observation that we witness occurs during the process of receiving an inheritance. Much of the time, adult children do not work with someone who looks at the most appropriate ways to efficiently integrate an inheritance into their present financial situation. Lack of planning during the inheritance process can potentially cause the permanent loss of tax opportunities.

Potential Solutions

Fortunately, solutions exist for each of the issues mentioned above. Trusts can be used to restrict the amount of money that is distributed to children, preventing money received in an inheritance from being squandered too quickly. Trusts can also be created in ways that ensure your children's inheritance will stay with them even if they get divorced. Finally, it is important to inform your children of the importance of seeing an adviser who takes a comprehensive planning approach during the inheritance process so they may be able to avoid missing out on opportunities.

These strategies are designed to help transfer your assets and legacy more efficiently. However, with any of these strategies it is important to communicate your concerns with an attorney as each strategy has advantages and disadvantages that need to be considered before implementation. Through open communication with your children and proper planning, it is my sincere hope that these options will give you the peace of mind that comes with knowing you are doing the right things for your family after you’re gone.

About the author

Ty A. Bernicke CFP®

Ty Bernicke is the President of Bernicke Wealth Management and serves as a Senior Wealth Manager. Ty currently works with a limited number of clients that require wealth and/or investment management services. His research on investment management, retirement planning, and tax minimization strategies have been published or recognized by The Wall Street Journal, Forbes, The New York Times, Futures Magazine, and many other well-known national and international publications. Ty Bernicke and Bernicke Wealth Management give back to the community and environment through numerous charitable endeavors. Ty spends his free time with his wife, two daughters, and one son. He also likes to fish, golf, and exercise.

Certifications, Licenses, and Registrations

  • Registered Principal with Triad Advisors, LLC
  • CERTIFIED FINANCIAL PLANNER™ professional
  • Accident, Life, Health, Property, Casualty, and Variable Life/Variable Annuity Insurance Licenses

Education and Training

  • Series 7, 66, 63, 24
  • Bachelors Degree - Finance; University of Wisconsin-Eau Claire
  • College for Financial Planning graduate

Forbes Finance Council Member 2018

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