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Editor’s note: This is part two of a two-part series that looks at the best ways to ensure an inheritance creates financial freedom, not a financial burden. Part one is Will Your Children’s Inheritance Set Them Free or Tie Them Up?
At age 18, my client — let’s call her Josie — received a trust that provided thousands of dollars a month in inheritance, more than enough to ensure she’d never have to work. So, she didn’t.
For more than two decades, Josie raised a family, redecorated her home, drove luxury cars and kept up with the latest fashions, using funds from her trust.
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Meanwhile, her husband worked full-time to cover basic expenses. Between his income and her trust, they were set financially for day-to-day, comfortable living.
However, by his 50s, her husband realized he couldn’t keep going forever and started looking toward retirement. Despite their high income, they had saved almost nothing.
The trust had made a lavish lifestyle possible for decades, but not indefinitely. They were at a crossroads.
This story isn’t unique. According to a Choice Mutual survey, 66% of young Americans have received or expect to receive an inheritance. The amounts received vary widely, from modest sums to sizable trusts like my client’s.
And as we witness the largest wealth transfer in history — an estimated $124 trillion is expected to change hands by 2048 — millions of heirs may soon find themselves in a position of financial security.
Unfortunately, nearly half of Americans feel unprepared to manage even small amounts, let alone substantial windfalls.
Freedom or handcuffs?
Money from an inheritance can be the ultimate flex or a lead to a big financial flop. It can open doors or quietly close them by removing the need to plan.
In Josie’s case, what was missing was basic money management skills. She spent every dollar the trust distributed on a lifestyle that looked grand, but didn’t build wealth.
She never pursued a career, nor did she save or invest, leaving her husband to shoulder the burden for their future.
By the time they understood the consequences, her parents were gone, her kids were grown, and they were staring down retirement with little to show for decades of spending. It was only when her husband had had enough that the tide began to turn, and planning for their future began.
Finding life’s purpose with help from past generations
At its best, an inheritance can give you the freedom to pursue your passions without compromise.
One of the most inspiring uses of an inheritance I’ve seen is a family that funded careers of passion that might otherwise be financially impossible. In this family, each of the siblings received enough money at age 25 to pursue their dreams without worrying about basic survival.
One child became a symphony musician in New York City, hardly a high-paying profession in one of the world’s most expensive cities.
The second turned a lifelong passion for horses into work as a trainer.
The third was able to take entrepreneurial risks that might otherwise have been impossible without the financial security of their inheritance.
Building a business with an inheritance
Inheritance can also provide seed capital for entrepreneurial ventures, allowing people to take a thoughtful approach to their businesses. I once worked with a woman who was able to leave her corporate job to start an interior design business, thanks to an inheritance.
She used the funds her grandparents gave her to launch her own design firm, but she also leveraged their social connections to find clients and locate high-end estate sales for sourcing antiques.
The result: A business that reflected her values and allowed her to be selective with projects and clients. The inheritance and smart planning enabled her to create a sustainable and satisfying business that she continues to run.
Planning for the next generation
Many families focus their estate plans on their children. But smart planning can go a step further to provide the generation beyond with a meaningful financial head start.
Grandparents can use their annual gift exclusions ($19,000 from each person in 2026) to fund life insurance premiums. When the grandparents pass, each grandchild can receive a substantial, tax-free death benefit that has had the opportunity to grow.
This strategy can support real financial freedom for the next generation. It can potentially enable grandchildren to get a debt-free education, start a business or make a down payment on a first home without financial strain.
When paired with a letter explaining the gift’s purpose, this structure instills values and supports independence for decades to come.
When emotions complicate inheritance
At its best, an inheritance is a gift of possibility. But family history is rarely that neat. Sometimes money arrives with emotional baggage. A child receiving an inheritance from a parent who was controlling, distant or absent may feel conflicted. Even an inheritance from a loving family member can present challenges.
One young man I worked with received a sizable inheritance from his mother but couldn’t bring himself to spend it. To him, the money still belonged to her. He felt that using it would dishonor her memory, even though it had been left to support his future.
Other people look at their inheritance as an attempt to make up for a difficult childhood. One woman I know used the money from an emotionally distant parent to fund educational programs in her community.
This allowed her to honor her financial good fortune, despite her conflicted feelings. In the meantime, it freed up her salary to build her retirement and work on other financial goals.
Regardless of circumstances, financial coaching can help you come to terms with your wealth and helps you understand the emotions behind your money habits. It can help you see money not as a burden, but as a resource, freeing you to tap into what’s most important to you.
The dating dilemma
Inherited wealth can also complicate romantic relationships. One young heir I knew purposely lived in a modest apartment and drove an economy car. He worried that potential partners would be more interested in his bank account than in him if he showed his wealth.
His approach helped him protect his values. But it also highlights the unique pressures that come with wealth. Transparency, boundaries and honest conversations are essential to building authentic relationships when money is involved.
The path to true financial freedom
As the Great Wealth Transfer picks up speed in the coming decades, more families will face these inheritance decisions. The key is preparation and sound financial support.
Whether your inheritance is modest or significant, it holds the potential to unlock freedom. It could allow you to start a business, go back to school, take a bucket list trip or support your children in ways that once felt out of reach. But you can only realize that potential through intention.
If possible, talk to your parents about their hopes for how the money will be used. Then, take ownership of your plan.
Josie’s story didn’t have to end in financial strain, and yours doesn’t either. The difference between those who build lasting wealth and those who watch it slip through their fingers comes down to preparation and education. Make your inheritance the foundation of your financial freedom.
