Should you tell your kids they are on track to receive a large inheritance? A Reddit user posted this question recently. The original poster (OP) said that he and his wife have a net worth of around $8 million. They’re planning to retire soon, but don’t plan to spend very lavishly so they expect to provide a large inheritance for their two kids.
The OP said that while the kids know the parents have some money, they have no idea how much. He’s wondering if telling his 18 and 22-year-old sons will cause them to lose their motivation for working hard and building their own success or if he should share the details with them.
The challenges of leaving a large inheritance
The OP is in an enviable position, of course, but he’s also in a difficult situation here, because there are definitely some situations where kids who have rich parents fail to thrive themselves because they know their inheritance will come someday. At the same time, it’s important for parents who are leaving a lot of money behind to prepare their children for how to manage it effectively.
Fortunately, from a federal tax perspective, the OP’s $8 million estate is well shielded. Under the recent One Big Beautiful Bill Act (OBBBA), the 2026 federal estate tax exemption is locked at $15 million per individual, or $30 million for a married couple. This shifts the primary hurdle from IRS tax mitigation to family governance and potential state-level estate taxes.
The OP also said he hopes it will be a long time until the kids inherit, but he may not necessarily want to wait to help out his children until after he passes. Young people often benefit significantly from getting a leg up earlier in life, when they are going to school or when they are trying to buy their first home and raise a family. The money can do more for them than when they are older and already well-established.
Rather than a dramatic, all-at-once wealth reveal, the parents might consider a financial “stress test” utilizing current tax exclusions. For 2026, the annual gift tax exclusion is $19,000 per parent, meaning they can jointly gift each son $38,000 tax-free this year. Observing whether the 18- and 22-year-olds invest, use the funds for tuition, or spend frivolously can dictate how the remaining wealth should be structured.
Should parents share details about their inheritance?
Ultimately, whether the OP tells his kids about the money or not should depend on how he thinks his children will handle the information.
He may want to wait until they are a little older and he sees them working on their own goals and handling their finances. If they are already on a good path, it’s less likely they will get off that path and lose their motivation just because money is coming decades down the line.
If he’s really worried about them losing their drive, he could also set conditions for inheriting. Instead of arbitrarily withholding funds, the parents could outline the mechanics of an Incentive Trust. These legal vehicles distribute wealth only when beneficiaries hit specific life milestones, such as matching their sons’ W-2 income dollar-for-dollar, paying out upon a college graduation, or providing seed money for a business. Imposing these kinds of restrictions can create family tensions, though, so unless the OP has reason to believe that his kids need this kind of motivation, he may be better off waiting to see if they thrive on their own accord.
The OP also doesn’t have to provide specific details about his finances. He can let his kids know they’re going to inherit some money and give them the support they’ll need to manage it in the future, but he doesn’t have to give them hard numbers. Since he will be living off this money and probably doesn’t know exactly how much he’ll have left anyway, there’s no reason the kids need the exact dollar amount when he has the inheritance conversation.
Talking with a financial advisor about how best to structure the inheritance could also be valuable for the OP. An $8 million net worth looks very different to heirs depending on its tax status. If the parents utilize tax-advantaged strategies like the Mega Backdoor Roth, they set their kids up for tax-free growth, whereas assets heavily tied up in pre-tax traditional 401(k)s could leave the kids with a massive income tax bomb due to the 10-year depletion rule.
Editor’s note: This article includes current details regarding the 2026 OBBBA federal estate tax exemption limits and the 2026 annual gift tax exclusion limits. It also incorporates information regarding the use of incentive trusts for wealth distribution and the inheritance tax implications associated with traditional versus Roth retirement accounts.
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