If you are fortunate enough to be able to save money for your children’s futures, money that will allow them to accomplish their goals and lead comfortable lives after you’re gone, be mindful of the challenges that go along with that good fortune.
An inheritance can present challenges for many recipients, particularly when it is a sizable amount of money. Some people do well with receiving this type of gift; others struggle with their sudden windfall and wind up using it in ways a parent likely did not intend. If you plan to leave a large inheritance to your children or grandchildren in your estate plan, there are steps you can take to prepare them for the gift.
Teach them about money management
Children who are unfamiliar with budgets, expenses, and long-term financial planning can struggle with coming into a large amount of money. They might spend it frivolously and ultimately regret their choices. Alternatively, they may feel too anxious to spend it at all.
To alleviate the stress and fear children might have, talk to them about spending money wisely. Consider introducing them to a financial planner. Encourage them to think about what they want and explore resources and articles that can provide some guidance, including this one from Investopedia.
Discuss your financial attitudes and goals
You might also consider sharing with them your own tactics and approach to money management to give them some perspective and guidance. When they understand how you look at money, your children might have an easier time reconciling their own decisions.
Consider placing restrictions on the payouts
If you are truly worried that your children will blow their inheritance, then you might think about placing some restrictions on it. For instance, consider putting money into a trust and then specifying when and how much a beneficiary will receive in a payout.
Protecting an inheritance with legal support
Whatever you decide to do in terms of leaving an inheritance, it is crucial that you discuss your plans with an attorney who can help you make them a reality. Proper estate planning can make the legal process go more smoothly and ensure your wishes, whatever they may be, are carried out.