Aaron Katsman 58.
(photo credit: Courtesy)
When working on financial plans for clients, the trickiest issue that usually
comes up is inheritance.
Inheritance is one of those issues that no one
really wants to talk about.
A large US insurance company put it this way:
“Inheriting money is bittersweet. Although someone you cared about is gone, that
person thought enough of you to leave you a portion of his or her hard-earned
While for financial planning purposes it’s important to know what
type of inheritance you will be receiving, we tend to shy away from topics that
we think might bring an ayin hara (evil eye).To know or not to know?
recently sat with a couple to go over their various assets. I asked them if they
had any idea about what they might receive as an inheritance (may their parents
live until 120). The answer they gave me typified the approach parents take to
The wife said her parents were open with her and the rest of
her siblings, and she knew more or less what they owned and what her inheritance
would be. The husband had no clue whatsoever as to what his parents’ financial
situation was, and said they never spoke about such issues.
parents prefer secrecy regarding financial matters. In some cases, this is
justified because their children might not be able to properly deal with the
information. Alternatively, if you are at this stage of life, understand that
your children’s lack of information might lead them to poor financial
decisions.Don’t rely on it
While making financial plans, when the issue
of inheritance comes up, sometimes the initial reaction is: “We don’t want to
rely on it.” I actually like this approach. Try planning your finances based on
what you have, not what you may or may not receive.
If you are planning
to buy a house, figure your price based on your current assets. I too often see
people “overbuy” (i.e., buy more than they can afford) because they estimate
that in six to eight years they are going to come into a large
The problem is that in most cases you have no way to know
when you are going to get this money.
On the other hand, if you are
trying to do long-term retirement planning, and your parents are getting on in
age, then I do feel it’s appropriate to get an idea of what you might receive,
because in 20 years or so, this will become a reality and your retirement will
also become a reality, so you need to plan for it.‘Ayin hara’ vs need to
There are different approaches among financial planners regarding how to
deal with the issue of potential inheritance. There are those who say the
children should ask what they should expect as an inheritance, or as a gift, and
then they can plan accordingly.
I believe in a much more subtle,
respectful approach. After completing a financial plan, the child should
approach the parents, explain the situation and ask if the assumptions that were
made were reasonable. If so, enough said; if not, the parent can go into more
detail about what the child can expect to receive.Sensitivity
likes to discus matters of death, neither the children nor the parents, not even
the financial adviser. Often when these issues are brought up, everyone starts
to squirm in their chairs. Nevertheless, it’s important to open the lines of
communication among parents and their children. That way, all sides know what to
expect, and there won’t be any inflated
email@example.com Aaron Katsman, a licensed
financial adviser in Israel and the United States, helps people with US
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