Many wealthy people give most of their fortune away to avoid the chance that it harms their children. However much you leave your children, you need to prepare them for it.
Not everyone knows how to handle a significant inheritance
Think back to when you were 20 years old. Imagine your parents had died and left you $25,000. What would you have done? Would you have put down a deposit on an apartment? Or would you have bought a first-class ticket for you and your friends to Tijuana for a month-long party? You can take steps to prepare your children to manage their inheritance wisely.
- Use trusts to help them manage the money
You do not need to leave a lump sum of money. You could drip-feed smaller amounts through a trust. Or you could put it in a trust until they reach an age where they will have the maturity to handle it.
- Introduce them to your financial advisor
If you have always relied on professionals help to manage your money, get your kids used to doing the same.
- Teach your children about money
If you want your children to invest their inheritance wisely, let them practice with smaller amounts. Even something as simple as setting up a lemonade stand can teach a child about money management. If you fear your children do not understand the value of money, think about where you take the next vacation. Rather than giving them a luxury holiday, spend some time volunteering together. Or travel to a developing world country where they can see first hand how fortunate they are.
Leaving your children an inheritance can be a fantastic way to give them a helping hand in a challenging world. An estate planning attorney can help you do so in a way that maximizes the chance that they use the money well.