Do you take potential inheritance into account when building a financial plan?

Do you take potential inheritance into account when building a financial plan?

The honest answer is yes, but cautiously.

Inheritance is one of the most emotionally charged and uncertain variables in any financial plan. It often exists in the background as a quiet assumption, something people expect will help “later on”, without knowing when, how much, or even if it will arrive at all.

That uncertainty is exactly why it needs to be handled properly.

In practice, we never build a plan that relies on inheritance to work. Instead, we model two scenarios.

One plan assumes no inheritance at all.
The other assumes an inheritance does arrive, at a later point, and shows how that would change the strategy.

This allows clients to see both realities clearly, without placing their financial security in someone else’s hands.

We are seeing this more and more with clients in their late 60s and early 70s who still have parents alive in their 90s. In one current case, both partners have a mother still very much kicking on. The result is that what many people assume will happen in their 50s or 60s may not occur until much later, if at all.

In the meantime, these clients are still working part time, not because they want to, but because their lifestyle still needs to be funded today.

This is where inheritance can become dangerous if it is treated as guaranteed.

If someone builds their retirement plan on the assumption that money is coming, they may underfund their own retirement, delay key decisions, or take unnecessary financial stress into later life. Worse still, health events or aged care costs for parents can significantly reduce what is eventually passed on.

That does not mean inheritance should be ignored. It just means it should be treated as a bonus, not a pillar.

By running two models, clients gain clarity.

They can see what their life looks like if nothing arrives.
They can also see the opportunities that open up if it does.

More flexibility.
More options around work.
More generosity to children or grandchildren.
Or simply more comfort and peace of mind.

Good advice does not pretend inheritance does not exist.
Great advice refuses to depend on it.

If your financial plan only works if someone else passes away, it is not a plan. It is a hope.