A Kiplinger-Morning Consult survey of more than 5,000 families finds only four in 10 older parents have wills and most have never discussed inheritance plans, even as an estimated $124 trillion in assets is set to change hands over the next two decades.
Only four in 10 older American parents have a will, one-third have designated beneficiaries on retirement accounts or life insurance policies, and just 14 percent have written a letter of instruction — even as an estimated $124 trillion in financial assets is expected to pass to heirs over the next two decades, according to Cerulli Associates data cited in a new Kiplinger-Morning Consult survey of more than 5,000 parents and adult children.
"The individuals and families I see excel and do this most effectively don't wait for uncertainty to disappear. They build their plans and then adapt as life unfolds," said Valerie Galinskaya, managing director and head of the Merrill Center for Family Wealth.
The survey, commissioned by Kiplinger and conducted by Morning Consult, found that nearly half of parents aged 55 and older expect to leave a meaningful inheritance, yet only about one-fourth of adults aged 25 to 60 with at least one living parent believe they will receive one. Roughly two in five families have never discussed the older generation's plans for passing along assets, and among those who have talked, conversations rarely move beyond generalities such as whether a will exists.
The disconnect matters because the amounts at stake, while rarely the eight-figure windfalls featured in headlines, are still consequential for most families. About one-fourth of parents expecting to leave an inheritance estimate their estate is worth less than $100,000, and roughly half put the total below $500,000, the survey found. Federal Reserve data corroborates the picture: about half of heirs receive less than $50,000, and 30 percent of inheritances range from $50,000 to $249,000.
Uncertainty stalls estate planning
The top reason families stay silent on inheritance is uncertainty. More than one-third of parents who have not discussed inheritance plans with adult children cite too many unknowns about longevity or how much money will remain. Overall, parents' leading worries are that inflation and economic pressures could erode what they leave behind and that long-term care or other health costs might deplete their estate.
"When families do not talk, everyone makes up a different story. That's when trouble starts," said Teresa Ghilarducci, professor of economics at The New School for Social Research.
The paralysis extends to legal documentation. Only four in 10 parents surveyed have a will, just over one-third have designated beneficiaries on retirement accounts or life insurance policies, and a scant 14 percent have written a letter of instruction. Parents uncertain about the value of their estate were half as likely to have a will as those confident about leaving an inheritance, according to the survey.
"The senior generation often feel they need everything completely buttoned up before they say anything to their children, so feeling uncertain about one or two things regarding estate planning shuts down dialogue about everything," said Joshua Morris, vice president of thought leadership and research insights at the Fidelity Center for Family Engagement.
Tax exposure looms for heirs of retirement accounts
For families that do plan, the tax treatment of inherited retirement accounts presents one of the most significant threats to wealth transfer. Under rules that took effect in recent years, heirs other than a spouse who inherit a traditional IRA or 401(k) must withdraw all funds within 10 years of the original owner's death, paying ordinary income tax on each withdrawal. Those distributions can push heirs into higher tax brackets, eroding the value of what they receive.
"The biggest threat to eroding the value of an inheritance for adult children who are beneficiaries of traditional retirement plans is the possible tax hit," said Kurt Supe, a certified public accountant and retirement planner at Creative Financial Group in Indianapolis.
One strategy advisers recommend is converting all or part of a traditional IRA or 401(k) to a Roth account over time. The account owner pays income tax on the conversion amount, but heirs can then withdraw the funds tax-free. The approach makes sense when the account owner is in a lower tax bracket than their children — a common scenario for retirees whose offspring are in peak earning years. Supe cautioned that withdrawals from traditional plans during conversion should not push the owner into a higher income tax bracket or Medicare premium tier.
Federal estate taxes apply only to estates above $15 million for individuals and $30 million for couples, so virtually no families outside the ultra-wealthy face that exposure. However, roughly a dozen states levy their own estate taxes, including Oregon with a $1 million exemption, Rhode Island at $1.84 million, and Massachusetts at $2 million.
Gifting now versus later
The survey also highlights a generational divide over timing. Nearly twice as many adult children say they would prefer parents help them financially now, when major life expenses are concentrated, as those who favor receiving a larger inheritance later. Yet 42 percent of parents intend to wait to provide an inheritance, most commonly because they want to ensure enough savings to support themselves through retirement. Just 14 percent said they would rather give more now to see children benefit from the money.
For parents who choose to gift during their lifetime, the 2026 annual exclusion allows up to $19,000 per recipient without IRS paperwork, or $38,000 for couples. Advisers suggest putting parameters around financial help — earmarking funds for a down payment, a grandchild's education, or a specific expense rather than providing unrestricted ongoing gifts.
"While parents don't want to give away too much during their lifetime, the flip side is that if you wait until you're gone, did your money really have the greatest impact it could have?" said Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
The fairness question
When it comes to dividing assets among multiple children, 71 percent of parents intend to split their estates equally. Adult children are less convinced that is the right approach — one in five said inheritances should be based on factors such as past financial help received or each sibling's financial need. One-third of adult children respondents expect an inheritance to create conflict with siblings.
"Adult children will often view inheritances through the lens of unresolved issues and patterns in the family, especially if the way assets are divided between siblings comes as a surprise to them," said Brad Klontz, a financial psychologist and coauthor of "Psychology of Financial Planning."
Experts emphasize that the most valuable part of estate planning is communication. Fidelity research found that 76 percent of younger family members want to know whether they are named as beneficiaries, but only 35 percent of baby boomers have shared this information. Advisers recommend a series of smaller conversations over time rather than a single high-stakes discussion, starting with low-stakes topics such as where documents are stored before moving to asset values and division plans.
"The biggest mistake parents can make is passing down money without communicating the family values that drive your thinking," Klontz said. "That could be and should be the most valuable part of your legacy."
This article is for informational purposes only and does not constitute professional advice. Figures and rules cited reflect information available as of the publication date; readers should verify against the latest official announcements and consult qualified professionals for personalized guidance.
