Are you thinking about leaving money to your kids in the form of an inheritance? If so, you should know the small stuff of planning this benevolent act matters a great deal. Let’s take some helpful tips to facilitate a seamless inheritance payment that is spent with prudence as time progresses.
Extinguish Potential Conflicts Between Family Members From the Get-go
The last thing you need is for your family members to argue about their inheritance, possibly to the point that one takes legal action to obtain more money than his or her siblings. You should make it crystal clear while you are alive that the money you leave to your children in the form of an inheritance will not be exactly even.
Let your intentions be known before passing away and your kids won’t squabble over a potential inheritance. After all, the last thing you need is for your kids to argue about their inheritance, possibly to the point that they take legal action, when they should be honoring your life after you depart this plane of existence.
Address Misguided Expectations
Every son or daughter has a general idea of what he or she will inherit. However, such assumptions rarely match up with reality. You can quell any potential drama or even legal action by making it perfectly clear that only some of your money will go to each of your children while some will go to charity and other parties. In short, your kids should have clear expectations as to how much money they will inherit. Though this conversation will prove somewhat uncomfortable, it will prevent heated arguments down the line.
Consider Passing on Some of Your Wealth Now
Some people do not handle a sudden infusion of wealth very well. If you are concerned your son or daughter will not be able to handle an influx of cash after you pass away, consider gradually passing on your money to that individual as time progresses. Start leaving money to your son or daughter as you enter your golden years and he or she will be that much more likely to spend it in a prudent manner, save or invest it.
Embrace the Challenge of Engaging in a Difficult Conversation
Talking about money with your son or daughter is inherently challenging. After all, the subject of money is highly sensitive. Set aside your fear that your child will be disappointed or angry with the inheritance you decide to give him or her and address this uncomfortable
subject head-on. This conversation is a vitally important step in clarifying your financial legacy, ultimately serving you and your children’s best interest.
The manner in which one of your children handles an inheritance might not be the same as the manner in which another one of your sons or daughters handles the money. Discuss the potential inheritance with your kids ahead of time, teach your offspring how to best handle an influx of cash and you will rest easy knowing your kids are prepared to manage your hard- earned money wisely for years or even decades after you depart this plane of existence. If you are not confident in your son or daughter’s ability to manage an influx of cash through an inheritance, establish a well-structured trust to guarantee your intentions for the use of the money are properly followed.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Opinions expressed are not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional.