But kids aren’t exactly known for their financial wherewithal. For that matter, neither are young adults (or even not-so-young adults).
So how can you ensure that your kids won’t squander the inheritance they might receive someday?
Setting up a trust can help. As Valdosta estate planning attorneys, we’ve helped plenty of parents create spendthrift trusts or other instruments in order to carefully prescribe the conditions under which their kids can inherit and spend their hard-earned assets.
But as Investors.com points out, the legal formalities are only one piece of the puzzle. The financial ethics you instill in your children while you’re still alive mean a lot too.
“The earlier you can have an open discussion about succession and inheritance planning with both generations, the better the odds are that [your] planning will be effective,” pension guru Ian Weinberg told Investors.
The website offers parents some specific advice for getting good habits to take root early on. Their tips include:
- When kids are little, have them divide their allowance into three containers — one for spending and fun, one for long-term savings, and one for charity.
- Attach each financial gift to a conversation. When it comes time for a birthday check or allowance, ask your children how they intend to use the money (and why).
- Encourage teenagers to take responsibility for their own finances. An after-school job can go a long way.
- Even if your children are likely to earn a sizeable inheritance someday, make sure they never use that as an excuse to rest on their laurels. Even wealthy children should be financially independent.
Worried about how your children might use your inheritance if they were to receive it sooner than expected? At Bennett Watson Trust, Estate & Elder Law, LLC, we can put you in control of the terms of that inheritance and help you approach a common-sense conversation with your children with tact. Contact us today.