Wealth transfer: there are many uncertainties about what you can get from a will (Adobe stock image)

The subject of inheritance is a tricky one. Some people feel they owe it, while others feel they deserve it. But the key question I’m interested in here is: what are some of the inherent risks when actually planning for a legacy?

Different cultures have different mindsets when it comes to leaving a legacy to future generations. For example, the cultural mindsets of the Far East and Middle East strive to ensure that each generation is more prosperous than the last. Both cultures focus on prosperity for the whole family, including the extended family. Joy comes from knowing they have contributed to the success of their family.

But family-focused prosperity often comes with family responsibilities, including caring for one’s elders both financially and physically in their later years.

On the other hand, the Western mindset towards leaving a legacy is changing. Now being more financially involved in the lives of their children or grandchildren is far more valuable to grandparents than focusing all their efforts on leaving a legacy for the next generation.

In my family growing up we were always told that when grandpa died we would all be taken care of. I realize this may sound a bit strange; but it was a pretty open conversation in the home, and even my grandfather himself said that he wanted to make sure that what he had worked so hard for would pass down to future generations.

That said, when he passed away at the ripe old age of 100 years and one month, the legacy passed on to the next generation (my father and uncle); but very little was passed on to us grandchildren – certainly nothing earth-shattering that would change my future financial decision-making.

In this case, I think the term “we will all be taken care of” differed somewhat between generations; anyway, we were all very grateful.

It is important to consider the social, emotional and psychological aspects of expecting an inheritance, as well as the practical realities that accompany wealth distribution within families.

1, Financial uncertainty

Many people make life decisions based on the belief that an inheritance is an upcoming decision that may involve a significant purchase, such as a home. The reality is that inheritance can be unpredictable, influenced by a variety of factors:

• Changes in family relationships: health issues, divorce or changes in the benefactor’s financial situation can directly affect the size of the inheritance.

• Amended will: family dynamics are fluid. A family member who once intended to leave their estate to a specific individual may change their mind, either knowingly or unknowingly, leaving potential heirs surprised and disillusioned.

• Stamp duty and expenses: the value of an estate can be significantly impaired by stamp duty, debts and administrative charges. Many heirs are shocked to learn that what they expected to inherit has been reduced because of these obligations.

2, Emotional distress and family dynamics

Expecting an inheritance can create tension and strained relationships within families. The expectation of obtaining wealth often breeds jealousy, resentment and competition among siblings and relatives. Some important emotional risks associated with inheritance expectations include:

• Sibling rivalry: if you’ve ever seen the HBO TV show Sequence, then you know it’s a classic example of a rich family and the internal bickering between siblings over the family legacy. It may just be a TV show, but it highlights the reality of broken promises and how a transfer of wealth can tear a family apart. Let’s face it: the race to earn a significant portion of an estate can lead to fractured relationships. Siblings may find themselves competing for their parents’ attention only to deal with the fallout if the inheritance doesn’t turn out the way they expected.

• Grief compounded: when it comes time to deal with the passing of a loved one, adding financial stress to the already heavy emotional burden can complicate the grieving process. Individuals may find themselves focusing on the financial implications rather than honoring their loved one’s memory.

• Family secrets and conflicts: discussions about inheritance can reveal underlying family problems or secrets, sometimes uncovering long-standing resentments or creating new fractures.

3, Addiction risks

Expecting an inheritance can begin to create a sense of dependency, leading individuals to make choices that can be detrimental to their personal development.

• Inhibited personal growth: relying on future inheritance can discourage individuals from pursuing careers or personal passions because they feel a financial safety net is already in place.

• Bad financial habits: a belief that an inheritance will cover future expenses can lead individuals to neglect responsibility for their finances. This poor planning approach can result in increased debt, insufficient savings for emergencies, and poor retirement planning.

4, legal complications

Inheritance expectations can lead to legal disputes that further complicate family relationships. Several potential legal pitfalls include:

• Probate issues: the inheritance process can be long and frustrating, especially if disputes arise between heirs. The probate process can drag on for years, prolonging the financial uncertainty for those dependent on the inheritance.

• Coming competitions: if there are objections to a will – perhaps based on claims that the testator lacked mental capacity or was unduly influenced – it can lead to protracted litigation.

• Estate planning pitfalls: if the benefactor did not engage in proper estate planning, this could lead to unintended beneficiaries or distributions, creating conflicts between heirs.

On the other hand, I am also convinced that if you are willing to accept an inheritance, you must also be willing to leave an inheritance. Financial prosperity should never be one-sided; But when it does, from what I’ve read it can get pretty lonely over the last few years.

Ultimately, while the prospect of receiving an inheritance may seem appealing, the risks of expecting one are considerable.

Financial insecurity, emotional turmoil, feelings of dependency, legal complications and dealing with family dynamics are all dangers when someone expects, or feels they are owed, an inheritance.

Therefore, it is important to navigate these risks wisely and focus on building financial independence rather than relying on uncertainty.

Talking openly about family finances with loved ones can also help highlight possible outcomes and reduce tensions. Additionally, proper estate planning and addressing the expectations of potential heirs can help navigate the overall family dynamic during difficult times.

• Carla Seely has 24 years of experience in financial services, wealth management and the insurance industry. During her career, she has obtained several investment licenses through the Canadian Securities Institute. She holds ACSI certification through the Chartered Institute for Securities and Investments, UK; QAFP through FP Canada; and AINS through the institutes. She also has a master’s degree in business administration and management