One of the most critical elements of both your legacy and estate plan is what you leave to your children.
Preparing them for what they will or will not receive can make the transfer of wealth less contentious and maximize the financial gifts you leave behind.
Preparing children to receive a sizable sum
Receiving a lot of money can be every person’s dream. However, this situation can quickly become a nightmare without the preparation and tools to manage a sudden influx of finances.
Thus, if you plan to leave your children a large sum of money when you pass away, consider the ways you can help them prepare for that now. These can include:
- Getting them involved in your business to see what it takes to earn that money
- Having them take financial education classes
- Sharing your economic beliefs and values
- Teaching them about savings and debt
These measures can help children better understand the value of money and what can happen when it is all gone.
Depending on their age, you may also want to explain the rules you have set up for a trust. Too often, the terms of trust catch a child by surprise, triggering feelings of anger and resentment.
If you will not leave an inheritance
Another unwelcome surprise could be a child learning they will not receive an inheritance after their parent is gone.
Rather than put them in this difficult position, you can talk to your child about your plans not to leave an inheritance.
While this can be a difficult conversation, you can start by explaining your reasons behind the decision. You can also help them get to a place where they do not need an inheritance to be successful, like:
- Leaving them financial gifts now
- Making investments in their school, a first home or funds to start their own business
- Creating a succession plan that positions them to take over your role in a business
These measures can still provide lasting financial support for a child without relying on a large inheritance.
Protecting your legacy and their future
The gifts you leave behind are entirely up to you. However, they can and will affect others long after you are gone. Taking these steps can protect your legacy and your loved ones for generations to come.