Americans Are Counting on an Inheritance Instead of Saving—but Family Homes Could be a Complication

In what’s being described as the Great Wealth Transfer, economists project that more than $100 trillion of wealth will pass from the baby boomer generation to their children over the next 25 years.

As of today, an overwhelming majority (66%) of Americans expect—or already have received—an inheritance from their parents, according to a new survey from Choice Mutual.

And that is having a profound effect on saving habits: Nearly 1 in 10 Americans feels less pressure to save because they expect to inherit money, the same survey found. But counting on an inheritance is a fragile strategy, especially when part of it is wrapped up in a family home.

Though baby boomers hold an estimated $18 trillion to $19 trillion of real estate wealth, health care costs, long-term care, overhead expenses, and tangled titles can shrink or erase what’s passed down. If you’re planning to inherit a family home, here’s what to know about protecting what’s often a family’s greatest asset.

The $100 trillion wealth transfer vs. reality

On average, young Americans expect to inherit $335,000 from their parents, while 8% expect sums of $1 million or more, according to the Choice Mutual survey. 

Those sums reflect not only the mass sums of money expected to change hands in the coming decades but also the mass scale of the optimism. While a grantor may have a current net worth of hundreds of thousands or even millions of dollars, inheritances can be much smaller, delayed, or even contested.

“Unfortunately, due to increased inflation, costs are rising dramatically,” explains Craig Kirsner, a retirement planner and author of “Help Preserve Your Retirement Assets and Leave a Legacy.”

“These rising costs are hitting retirees the hardest as they aren’t working anymore and typically have a fixed amount of income that often doesn’t grow as fast as inflation,” he adds.

It’s something that Jessica Vance, a real estate agent and foreclosure investor, has seen firsthand. She recently came across a home that had gone to auction because the family couldn’t afford their father’s long-term care. The property had plenty of equity, but holding on to it would have meant draining that value to cover medical bills. By letting it go, the state picked up the cost of care—but the family lost the home and, with it, the inheritance.

Kirsner and Vance highlight a disturbing reality facing retirees and their heirs: Many are unprepared for the soaring costs of aging and end up spending what they once hoped to leave to their children, on medical bills, long-term care, and debt tied to the family home instead.

How family homes can sink inheritances

“One of the biggest threats to real estate inheritances is debt,” explains Tyler Livingston, an estate planning attorney at Coker, Robb & Cannon. And debt is rising among retirees, nearly doubling from 1992 to 2022, according to research from AARP.

A home is, in many cases, ideal collateral for debt. And while leveraging that asset to help pay for the costs of living is a useful tool, it can drain inheritances. Kirsner says this isn’t necessarily a bad thing.

“As a retirement planner, I always say to my clients that I want them to live their best lives. I’m not worried about their children’s inheritance,” he says. “While it’s nice to leave assets to your family, if it comes as a sacrifice to my retired clients’ well-being, that doesn’t make sense to me.”

In other words, debt may be necessary to ensure a retiree’s quality of life, but heirs counting on that wealth should be ready for the possibility that little, or nothing, will be left behind.

“If a property owner passes away with significant mortgages, home equity loans, or unpaid taxes, those obligations must be settled before heirs receive anything,” explains Livingston.

Here are some of the most common to look out for:

Reverse mortgages and home equity loans

Reverse mortgages and home equity lines of credit are just one way wealth tied up in property can evaporate. These loans allow homeowners to turn the equity in their homes into liquid cash without selling, but fees add up and repayment may require selling the home if monthly payments can’t be made.

Probate and tangled titles

Even when debt isn’t an issue, legal hurdles can eat away at an inheritance. Without a trust or a transfer on death deed, properties may have to pass through probate, a process that can involve months of delays, expensive court fees, and even forced sales if heirs disagree.

Property taxes and upkeep

Finally, inheriting a house doesn’t just mean acquiring an asset—it also comes with carrying costs. Property taxes, insurance, and maintenance can run thousands of dollars a year. In high-value markets, taxes alone can force families to sell.

“Property taxes are perhaps the most significant hidden threats,” says Livingston. “In areas with rising values, heirs may inherit a property that is worth quite a lot, but it comes with a significant tax burden. They may be forced to sell if they can’t afford that tax burden. These issues disproportionately impact families who haven’t proactively drafted an estate plan, causing wealth that could have been preserved to be lost.”

Steps to protect your inheritance before it’s too late

As Livingston points out, those who don’t have a solid estate plan in place assume the greatest risk of facing the unexpected costs of inheritance—and very few families are prepared. Only 24% of U.S. adults have a will, according to a recent study from Caring.com. However, a 2024 study from AARP shows that number doubles when looking at those aged 50 or older.

Experts say the best safeguard is to start with the paperwork: a will, a trust, and property titles that are accurate to avoid probate disputes or tangled ownership. 

Families should also think ahead about long-term care. Setting aside savings or purchasing insurance can keep nursing home costs from draining home equity. 

Just as important is communication. Have candid conversations about money, health care, and inheritance expectations early and often to help prevent conflict or surprises later on. And for families who want to balance quality of life for retirees with preserving assets for heirs, attorneys, CPAs, and financial planners can help build a strategy that holds up when it matters most.

“Most importantly,” says Livingston, “families shouldn’t assume an inheritance will take care of their financial future. Proactive saving and intentional estate planning are the best safeguards for both generations.”

An inheritance can be a gift, but it shouldn’t be anyone’s financial plan. Counting on one is risky, especially when rising health care costs, debt, and taxes can shrink or erase what’s left behind. The only way to stay secure is to save and invest on your own, and view any inheritance as an unexpected bonus rather than a guarantee.