Preparing Millennials and Gen Zs for Inheritance

The 'Great Wealth Transfer' has begun which means, over the coming decades, Generation X, Millennials, and Generation Z are expected to have over $100 trillion passed down from Baby Boomers.

Recently, I've worked with several next-generation clients navigating inheritance for the first time.

One inherited an IRA from their father.

Another received life insurance proceeds after the loss of their spouse.

Another inherited their childhood home from their mother.

Each scenario involved a different type of asset with different rules, timelines, and tax implications, but each person was navigating their own emotional complexities around the inheritance.

If you're someone who has recently inherited, or expect to, you know inheritance isn't just about the assets. It's about grief, memory, identity, responsibility, and oftentimes guilt.

In this article, we explore a few real-life case studies that balance both the financial and emotional responsibilities of receiving an inheritance so you can approach your own situation with clarity, confidence, and intention.

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Inherited IRA: Inheritance Expectations

One client came to me seeking advice on a small inherited IRA after losing their father.

On paper, it was straightforward:

• They were a non-spouse beneficiary

• Their father had already begun Required Minimum Distributions (RMDs), therefore, they had to continue taking them

• They had 10-years to fully distribute the account

• Taxes would be owed on distributions

From a planning perspective, we reviewed withdrawal options and discussed how distributions would affect their taxes. Because they were in an unusually low-income year but expected significantly higher income in future years, it made sense to take a lump sum distribution.

The math was clear. But emotionally?

They were hesitant, and slightly uncomfortable, to touch the money. They struggled with the idea that nothing they could spend it on would truly reflect what he would have wanted.

That's something a spreadsheet can't solve. So we stepped away from the numbers. We talked about their goals and aspirations. We talked about their father and what they enjoyed doing together and what his values were. We explored what it might mean to use the money in a way that honored those values while also applying the inheritance towards their own goals.

Life Insurance: When Relief and Guilt Collide

This client came to see me before receiving life insurance proceeds following the loss of their spouse.

From a financial and tax standpoint, the payout was clean cut:

• Income tax free

• Paid out quickly

• Liquid and flexible

But emotionally, it was anything but clean cut.

There was a sense of relief from financial burdens, but there was also a feeling of uneasiness. The money was intended to provide security, yet spending it felt wrong.

In our conversations, we focused on intention. Why was this policy put in place? Was if for income replacement? Debt payoff? Long-term investing?

Reframing the proceeds as tool to continue their spouses legacy and identifying intention behind the policy made it easier to use the funds confidently.

House: Logic vs Memories

The most emotionally complex situation involved a client who inherited their childhood home from their mother.

Financially, they were strained. They were in between jobs, the house required significant maintenance, and every day they woke up anxious and stressed about owning this property.

But emotionally, the house was more than an asset. It was home. It was birthday parties, holidays, playing in the backyard.

They listed it several times, received offers, but delayed the process several times. Not because the numbers didn't work, but because selling felt like erasing something.

During our time together, we talked about the impact of keeping, selling, or renting the property, but more importantly, we worked on reframing. Selling the home doesn't mean they'd be selling the memories.

When they were able to separate the property from what it represented emotionally, they were finally able to move forward in a way that brought relief instead of regret.

How to Prepare for Inheritance

Talking to your family about estate planning can feel uncomfortable. It requires acknowledging mortality, confronting finances, and navigating family dynamics.

However, silence creates far more stress than transparency.

To prepare the next generation for inheritance, families should have ongoing conversations to:

• Explain what assets exist and how they work

• Clarify the purpose of any insurance policies

• Discuss distribution rules for inherited assets

• Address your role and responsibilities

• Share the "why" behind estate decisions

These conversations bring clarity to roles, intention to assets, and confidence to beneficiaries.

Recommendation: You may also consider working with a financial planner and/or estate attorney to facilitate these discussions. Having a neutral third party can make difficult conversations more productive.

Conclusion:

Markets fluctuate and tax laws change, but the emotional complexities of an inheritance will always be complex and personal.

If you're navigating inheritance right now, its normal to feel overwhelmed, hesitant, and for the math and emotions to not align. The goal isn't to remove emotion from the equation. It's to make decisions that honor both your financial reality and your values.

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 Important Disclosures: Infinity Financial Services is a registered investment advisor offering investment advisory services through Core Planning, LLC. Registration does not imply a certain level of skill or training. This blog is for personal finance education, not advice, and you should consult with your own adviser before taking action. Please click here to read the full disclosures.