After a lifetime of hard work, it makes sense that many people want to leave an inheritance to their children. It’s likely that they also want to ensure that the money is used responsibly. By focusing on the children who will receive the inheritance, it can help set them up for success.
Creating an estate plan
First, it’s crucial to create an estate plan to ensure the inheritance is transferred according to the parent’s wishes. This applies whether the parent has significant wealth or smaller amounts to pass on. Depending on their individual circumstances, the parent can create either a will or trust.
For parents who have smaller children, it can help them grow emotionally and socially when parents model financial responsibility early in their lives. Allowing children to manage small amounts of money can also help them learn how to understand its value, make mistakes and recover from failure, all before they become beneficiaries of the estate.
Parents may want to consider talking with older children about the amount of their estate, what type of legacy they want to leave for their family and the expectations they have around how it is managed. This might include discussing the uses for the inheritance, such as for the child’s education, to start a business or to contribute to charitable organizations.
By having these conversations, it establishes trust between the parent and child. In addition, it gives the child an opportunity to ask questions and learn about the family history that led to the future inheritance.
If parents have questions about which estate plan is right for them, there is assistance available.