In the next 20 years, an estimated $84 trillion in assets is expected to change hands, with younger generations — including Gen Xers, millennials and Gen Zers and Gen Alphas — inheriting funds from older generations.
If you’ve saved and managed your money well all your life, you may be eager to provide future generations with an inheritance, too. But what if you want to skip a generation?
Say you’re in a position to give your grandson a $500,000 inheritance, but you don’t want to go through his mother — your daughter — to pass along that wealth. She may have a history of poor financial decisions and you fear she might seize the money to pay off her own debts or buy something extravagant.
You have the right to designate the heir of your choosing and to skip your daughter. But it’s important to go about it wisely as there are legal and financial implications to doing so.
There are a variety of reasons a grandparent may want to leave an inheritance to their grandchild and not their own adult child. For one thing, you may feel you’ve provided enough financial support to your adult kids, and want to make sure your grandkids get their share.
A 2024 Savings.com report revealed that 47% of parents are providing some type of financial support to their adult children — averaging out to $1,384 a month, or roughly $16,600 per year. If you’ve been handing out a similar amount of money for a long time, it wouldn’t be unreasonable to exclude an adult child from your estate.
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In addition to your concerns around your daughter’s financial decision-making, you may not want her to control or withhold funds you’d like to see go to your grandchild for a specific purpose — particularly if it is one that daughter doesn’t support.
Estrangement, which is relatively common between fathers and their children, is another reason you may want to skip a generation. National Institutes of Health reports that in 2023, 6% of Americans were estranged from their mothers, while more than one in four — 26% — were estranged from their fathers.
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