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Searching Webster for the word preheritance results in a "not found" condition. The latest
Wiki definition classifies preheritance as a noun with the following definition:

1. Financial support given by living people to their children, grandchildren etc., as
an alternative to an inheritance after their death

Sounds simple enough and it is a concept that is gaining favor for a number of key

reasons:

* Inheritance & Estate Taxes continue to shrink death benefits to heirs. In the U.S.
Inheritance taxes are state imposed and Estate taxes a Federal liability. Nearly all
countries have some type of similar penalty that can significantly reduce the size
of an estate.

* Longer life spans are delaying inheritance payouts. Actuaries compute life
expectancy in various manners but a 66 year old male (retirement age) can expect
to live beyond 81. A female of the same age will likely attain 84 years of age
before becoming deceased.

* Parents have a desire to assist children during their early working years with
larger expenses such as homes and paying for continuing education tuition.

To illustrate I will use myself as an example as my situation will match that of many
families. I am 55 years old, divorced with 3 children. Their ages are 18, 19 and 24 which
makes me older than a high percentage of parents. Should I have had children earlier in
life the case for preheritance would be even more compelling. While not wealthy I have
accumulated assets which will allow me to live comfortably post-retirement. At 55 my
life expectancy would be 85. Under the inheritance concept I would continue to amass
savings and assets which would be bestowed on my children upon my death. My assets
will continue to grow even during retirement assuming likely 6% return on investments. I
will die leaving a veritable small fortune to heirs.

Why should this be my goal? At my projected time of death my children will be 48, 49
and 54. If I beat the actuarial table they will of course be older. Inheriting a large amount
at this juncture in their lives makes little sense. Why not assist them in their late twenties
or early thirties as they buy homes and raise families? The gift tax exclusion for 2007-
2008 is $12,000 per person. This preheritance "gifting" would allow for monies to be
utilized when more likely needed.

Risks:
I am not suggesting that each of us does not have a responsibility to save and prepare for
a long and pleasant retirement. Each individual should analyze monies needed in
retirement based on life expectancy, health, retirement lifestyle and expected return on
investments.

However, building a huge accumulation as a life's goal makes no logical sense. My
children understand my approach and also the fact that any preheritance distributions to
them come with strings...... must be used for constructive needs not a trip to Tahiti. They
also understand that if I am lucky enough to significantly outlive my projected life
expectancy... then turnaround is fair play! They have an obligation to provide for me as
I have attempted to provide assistance to them.

Preheritance also stimulates the lagging economy by placing dollars to work rather than
simply setting idle in over-bulging retirement accounts.

Learn more about this author, Michael in Florida.
Click here to send this author comments or questions.

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