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Wealthy Worry about Tax Consequences of Large Inheritance

Daryll Pomey Orat - Sunday, April 19, 2015

A recent survey focused on how much wealth rich individuals should leave children. On an average, according to the survey by Merrill Lynch, leaving a child $60 million out of an estate of $100 million, is simply too much.

The survey focused on high net worth individuals, and more than 50% of the individuals in the survey admitted that they were very concerned about leaving vast inheritances to their children. The biggest concern was that this would create a sense of privilege and entitlement, and their children would lose any drive or ambition.

However, children who worry that their parents will leave them nothing at all, shouldn't be too concerned. The survey found that leaving children just $26 million out of $100 million was deemed much too little. In other words, parents want to leave their children enough to do as much as they possibly can and explore different opportunities with their inheritance, but do not want to leave them enough to simply kill any ambition that they have.

Another major concern that wealthy individuals have is the impact of real estate taxes on their inheritance. Each of the individuals in the survey had a minimum of $5 million in investable assets, which means that estate taxes would apply on these estates. For most of these individuals, or 85%, minimizing the impact of estate taxes was a high priority. 91% said that they planned to leave much of their wealth to their immediate family members, while 4% felt that charitable organizations and philanthropic activities would come first.

High net worth individuals have special concerns when it comes to estate planning and inheritances. It's important to make use of effective estate planning tools that can help you leave assets to your children, while encouraging them to be responsible about spending it.

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