Do you worry that your children or grandchildren won't be as smart with their inheritance as you'd like? If you worked hard to build a solid financial life for your family, you don't want to feel like it will all disappear soon after you pass away.
But what can you do to prevent money from slipping away? Here are a few methods you may want to employ for the best results.
1. Use Increments
If you utilize trusts in your estate, you don't have to leave a person's entire inheritance to them directly upon your passing. Choose an incremental method that fits the size of your estate and the heir's lifestyle. For example, you could choose to give the inheritance one-third at a time at ages 25, 30, and 35.
You can also tie future funds dispersal to things other than time. Try using life events, such as graduation or having children of their own. Or you could give a matching amount to how much the person earns each year.
2. Get the Kids Involved
Is your concern that your children or grandchildren may not appreciate the value of what you leave them? Then get them involved in the work of earning, maintaining, or choosing what to do with it.
If your estate comes largely from a business, are future inheritors involved in company operations or decision-making? With a close-up view of what you go through or what that business means to you and others, your child may take better ownership of the fruits of your labors.
There are other ways to show the value of your money. Do heirs help make charitable choices to help others or further causes with your estate? This can help a child see the money as more than just a way to have fun.
3. Avoid Cash
Not every beneficiary makes the best choices with a pile of cash. But you can help them in ways that don't involve direct cash. You can pay for college tuition or lodging. You may want to help them start a business — both with seed money and expertise. You might provide the down payment for a home or fulfill a lifelong goal.
4. Try a Cash Experiment
You can learn about your adult children's financial goals and decision-making abilities even before you pass away. How? One method is to provide smaller monetary gifts and see how they use them.
The IRS allows taxpayers to gift up to $15,000 (in 2019) to individuals without tax implications. Give your intended beneficiary an amount to invest, save, or spend as they wish. And then see how they handle things.
5. Communicate Openly
Many families don't like to discuss money, but in this situation you do your children a favor by communicating.
Discuss the estate in general terms as well as how you intend to divide it. But, more importantly, discuss with your heirs what your wishes are for your estate. This isn't, of course, about telling them what to spend it on; rather, talk about what you want the money to accomplish or bring about in their lives.
Be open with your children or family members' and explain what your wishes are for their inheritance. Ask them about their goals for the inheritance and how they can create a successful path to achieve those financial goals. Work together with a positive attitude.
One of the most important parts of ensuring that your estate doesn't disappear in the hands of your heirs is to plan ahead. There are many options available to you, but you need to learn about and understand them first. At the Law Office of Greg Quimby, P.C., we can help you analyze your options and find the right ones for you. Call today to make an appointment.