# Early Inheritance Trap > A $100K gift can backfire on adult children's financial habits. - Title: Early Inheritance Trap · Kiplinger | Shortify - Summary: A $100K gift can backfire on adult children's financial habits. Early inheritances may encourage impulsive spending or poor financial choices if not… - Keywords: inheritance, financial planner, incentive trust, adult children, wealth transfer, financial gift, mortality salience, house money effect, roth ira, 529 account, financial planning, Early - Source: Kiplinger — https://kiplinger.com/retirement/inheritance/the-early-inheritance-trap-why-a-gift-can-backfire-and-how-to-fix-it - Published: 2026-10-04T15:00:00+00:00 - Read time: 2 min - Topics: inheritance, financial planner, incentive trust, adult children, wealth transfer, financial gift, mortality salience, house money effect, roth ira, 529 account, financial planning ## The Early Inheritance Trap Warren Buffett once advised parents to leave children enough to do anything but not enough to do nothing. > Leave the children enough so that they can do anything but not enough that they can do nothing. ## Parental Gift Expectations A Kiplinger and Morning Consult survey found 22% of parents hope adult children use inheritance to improve lives, not waste it. > 22% ## Early Inheritance Risks An inheritance can lead to impulsive spending or unhealthy financial behavior, as seen in a hypothetical case where one twin quit a job to day-trade while the other bought a depreciating luxury car. > one twin quit a job to day-trade, while the other used it to buy a luxury car that would depreciate over time ## Financial Planner Insight Joy Slabaugh, a certified financial planner, explains that money can unintentionally interfere with motivation, identity, autonomy or family relationships. > Money can unintentionally interfere with motivation, identity, autonomy or family relationships. ## Why Early Inheritances Backfire 45% of adult children prefer financial help now over a larger inheritance later, but only 14% of parents would prefer to give now. > 45% ## The House Money Effect Unearned money tends to be treated more casually than a paycheck, leading to impulsive spending as people view it as the casino's money rather than their own. > house money effect ## Incentive Trust Solution An incentive trust releases money only when a child meets specific conditions, such as earning a college degree or matching income from a job. > An incentive trust releases money only when your child meets certain conditions you've set ## Incentive Trust Conditions Common conditions include a college degree, matching income from a job, or releasing money for a specific step like buying a first home. > A college degree, matching income from a job, or releasing money for a specific step like buying a first home ## Trust Risks Conditions based on salary, profession, marriage, or children can become unfair quickly, and rigid rules may not account for unexpected life events. > Conditions based on earning a particular salary, entering a certain profession, getting married or having children can become unfair very quickly ## Financial Planning Advice Start small with smaller gifts over several years to test how children handle money, or use Roth IRAs, 529 accounts, or direct tuition payments. > Smaller gifts over several years can provide a useful test of how the child handles money ## The Goal The primary goal is to help the next generation without enabling poor financial management or creating the expectation of constant financial support. > The primary goal is to help the next generation, without enabling poor financial management, or creating the expectation that they will always be 'bailed out' by mom and dad ## Key takeaway Early inheritances may encourage impulsive spending or poor financial choices if not structured with conditions.