The topic of inheritance is a tricky one. Some people feel they are owed it, whereas others feel like they earned it. But the key question I’m interested in here is: what are some of the inherent risks when you actually plan for an inheritance?

Different cultures have different mindsets when it comes to leaving a legacy for future generations. For example, the Far Eastern and Middle Eastern cultural mindsets strive to ensure that each generation is more prosperous than the last. Both cultures focus on prosperity for the entire family, including extended family. Joy comes from knowing they have contributed to the success of their family.

However, family-focused prosperity often comes with family responsibilities, including taking care of their elders both financially and physically during their later years.

On the other hand, the Western mindset towards leaving an inheritance is shifting. Now, being more financially involved in their children or grandchildren’s lives is far more valuable for grandparents than focusing all their efforts on leaving a legacy for the next generation.

In my family growing up, we were always told that when Grandpa dies, we would all be taken care of. I realise this might sound a bit odd; however it was quite an open conversation in the home, and even my grandfather himself said he wanted to ensure that what he had worked so hard for would pass down to future generations.

That said, when he passed away at the ripe old age of 100 years and one month, the legacy was passed to the next generation (my father and uncle); however, very little was passed along to us grandchildren – certainly nothing earth-shattering that would change the course of my future financial decision-making.

In this instance, I think the term “we are all going to be taken care of” slightly differed between the generations; either way, we were all very thankful.

It is essential to consider the social, emotional and psychological aspects of expecting an inheritance, as well as the practical realities that accompany wealth distribution within families.

1, Financial uncertainty

Many people make life decisions based on the belief that an inheritance is a forthcoming decision that could involve a significant purchase, like a homestead. The reality is that inheritances can be unpredictable, influenced by a variety of factors:

• Changes in family circumstances: health issues, divorce or changes in the financial situation of the benefactor can directly affect the size of the inheritance.

• Altered wills: family dynamics are fluid. A family member who once intended to leave their estate to a specific individual may change their mind, either consciously or unconsciously, leaving potential heirs surprised and disillusioned.

• Stamp duty and expenses: the value of an estate may be significantly diminished by stamp duty, debts and administrative fees. Many heirs are shocked to learn that what they expected to inherit has been reduced due to these obligations.

2, Emotional turmoil and family dynamics

Expecting an inheritance can create tension and strain relationships within families. The anticipation of receiving wealth often breeds jealousy, resentment and competition among siblings and relatives. Some key emotional risks tied to inheritance expectations include:

• Sibling rivalry: if you have ever watched the HBO TV show Succession, then you will know it is a classic example of a wealthy family and the internal bickering between siblings over the family’s legacy. It may be just a TV show, but it does highlight the reality of broken promises, and how a transfer of wealth can tear a family apart. Let’s face it: the race to earn a significant share of an estate can lead to fractured relationships. Siblings may find themselves competing for their parent's attention only to deal with the fallout if the inheritance does not materialise as they anticipated.

• Grief compounded: when the time comes to deal with a loved one’s passing, adding financial stress to the already heavy emotional load can complicate the grieving process. Individuals may find themselves focusing on the financial implications rather than honouring their loved one’s memory.

• Family secrets and conflicts: discussions about inheritances can expose underlying family issues or secrets, sometimes revealing long-held resentments or creating new fractures.

3, Dependency risks

Expecting an inheritance can begin to create a sense of dependency, leading individuals to make choices that may be detrimental to their personal development.

• Stunted personal growth: relying on future inheritance can deter individuals from pursuing careers or personal passions because they feel a financial safety net is already in place.

• Poor financial habits: a belief that an inheritance will cover future expenses might lead individuals to neglect responsibility for their finances. This poor planning approach can result in mounting debt, inadequate savings for emergencies and poor retirement planning.

4, Legal complications

Inheritance expectations can lead to legal disputes that further complicate family relationships. Several potential legal pitfalls include:

• Probate issues: the inheritance process can be lengthy and frustrating, particularly if disputes arise between heirs. The probate process can last for years, prolonging financial uncertainty for those dependent on the inheritance.

• Will contests: if there are challenges to a will – perhaps based on claims that the testator lacked mental capacity or was unduly influenced – this can lead to lengthy court battles.

• Estate planning pitfalls: if the benefactor did not engage in proper estate planning, this can lead to unintended beneficiaries or distributions, sparking conflict among heirs.

On the other hand, I am also a firm believer that if you are willing to accept an inheritance then you should also be willing to leave an inheritance. Financial prosperity should never be one-sided; however, when it does happen, from what I have read it can get pretty lonely in those last few years.

At the end of the day, while the prospect of receiving an inheritance may seem appealing, the risks associated with expecting one are considerable.

Financial uncertainty, emotional turmoil, feelings of dependency, legal complications and dealing with family dynamics are all dangers when someone is expecting, or feel they are owed, an inheritance.

Therefore, navigating these risks wisely and focusing on building financial independence as opposed to relying on uncertainty is key.

Furthermore, talking openly about family finances with loved ones can help highlight possible outcomes and reduce tensions. Moreover, proper estate planning and addressing potential heirs' expectations can help navigate the overall family dynamics during difficult times.

• Carla Seely has 24 years of experience in the financial services, wealth management and insurance industries. Over the course of her career, she has obtained several investment licences through the Canadian Securities Institute. She holds ACSI certification through the Chartered Institute for Securities and Investments, UK; QAFP through FP Canada; and AINS through the Institutes. She also has a master’s degree in business and management