Inheriting money is a lot like winning the lottery — and not only because both involve free handouts. Nowadays, both scenarios may be just as unlikely to occur. A 2006 AARP study, “In Their Dreams: What Will Boomers Inherit?” reveals that about one out of five boomer households has received an inheritance, and 15 percent still expect to be given one. Whether you have benefited from an inheritance, or expect to, it may now be your turn to ponder what — if anything — you’ll be able to leave your kids and grandkids.

Of course, increased life expectancies and climbing health-care costs may mean there’s little left over — or could turn your “golden years” into a decision between safeguarding the financial gift you intend to give and splurging hard-earned dollars on your heart’s desires. I have clients who stay at the Holiday Inn over the Ritz-Carlton for the sake of padding the inheritance they plan to leave. I also have clients whose goal is to die broke. Neither path is wrong. But if you find yourself in the former category, and anticipate leaving a surplus in your bank account, consider these tips on inheritance planning:

Don’t leave money directly to minors.

It would be a shame to have worked hard and saved diligently so you can leave your grandchildren an inheritance, only to have them squander the cash. Unfortunately, young adults don’t always have the maturity to handle money responsibly, and a large inheritance could be too much temptation. If you’re planning to pass on a substantial sum — $100,000 or more — to a minor, set up a trust. (Contact your local county bar association to get the name of an estate-planning lawyer who can do this for you.) You might consider distributing the money in one-third chunks when your grandchild turns 25, 35, and 45.

Talk about your expectations.

To help ensure that your grandchildren respect their inheritance — whatever their age, whatever the amount — start a conversation with them now about where the money came from, how you earned it, and what you hope they will do with it. Let them know that the money is part of a family legacy; talk to them about investing and philanthropy. Giving an inheritance history and context can help your grandchildren understand that it’s not a gift to be frittered away.

Don’t attach strings.

At the same time, be careful not to “control” the inheritance. My friend Jonathan Forster, an estate-planning attorney and partner at Los Angeles-based Weinstock, Manion, Reisman, Shore & Neumann, cautions his clients against putting restrictions or desires in their wills or living trusts when it comes to inheritances. “You can put in desires [such as using the money for college], but the desires are not binding,” he says. “Or you can put it in a trust and have the trustee allocate money only for that purpose. But there might be a good reason why someone doesn’t go to college. You never know.”

Be specific.

Whether you’re able to leave $5,000 or $500,000, Forster says it’s critical to be as specific as possible in your will or living trust. Ambiguous language or instructions are susceptible to attack. Don’t just leave money “to the grandchildren.” Specify to which ones, and how much. Do you want the money divided equally? Or does one grandchild have special needs or circumstances that you feel merit a larger share? How you divvy it up is your call, just make sure your wishes are made clear.

Consider giving now.

Another option is to give your grandkids their “inheritance” while you’re still alive. You can give an annual exclusion gift of $15,000 per child — tax free — to an unlimited number of recipients every year. “It’s a great thing to do for your family because you can enjoy watching them use the money,” says Forster. “At the same time, it’s an effective tax strategy.”

|March 1, 2012