Four Ways to Help Your Children Optimize Their Inheritance 

By Mike Cona on July 5, 2024

If you’re fortunate enough to have more than you need to cover your retirement spending and you anticipate leaving an inheritance to your children, it’s a good idea to think ahead in terms of how prepared they are to receive that inheritance and what safeguards you’ve put in place. Doing so helps to ensure they are better-equipped to handle the responsibility and also may protect them from possible blind spots. 

Here are four steps you can take to help prepare them for success:  

1. Educate and Empower  

As early as you think they are capable, work with your children to help them develop financial literacy and understand the principles of budgeting, investing, and saving. The values that you instill early on while the dollar amounts are relatively low will hopefully remain with your children as they become adults and make more impactful financial decisions on their own. 

2. Implement a Trust 

Trusts are useful and versatile tools that are not just for the wealthy. A trust can allow you to control the distribution of assets, set conditions for access, and appoint a trusted trustee to manage the assets on your children’s behalf.¹ Not only can this protect your children from their own potential future misspending, it can also help protect family assets from creditors or a possible future divorce.   

3. Consider a Gradual Wealth Transfer 

If you have the means to do so, consider structured gifting or another type of gradual wealth transfer to the next generation. Structured distributions over time can help your heirs gradually become accustomed to managing their wealth and reduce the risk of impulsive spending. This may allow your children to accomplish certain financial goals a bit sooner, and can also give them the simple opportunity to say “thank you” — something they don’t get when receiving an inheritance after a loved one passes away.  

4. Facilitate Communication 

Open and honest communication within your family is paramount. Set aside time in regular family meetings to discuss financial matters, estate plans, and expectations. This can also be a good time to discuss shared values and any causes that you care about. A Donor Advised Fund can be a valuable tool for reducing your current tax burden and also setting up your heirs for future charitable giving. 

By following some of these strategies, you can take proactive steps to safeguard your family’s legacy and provide your children with the tools they need to thrive. If you have any questions about setting your children up for financial success, please reach out to our team! 

Sources: 

¹ The American Bar Association. Family Trusts Guide. https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/ 

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