Information and education can go a long way in helping your children to use an inheritance wisely.
Mistakes can be made by children who inherit money but lack the information on how to deal with it maturely and wisely, according to Nasdaq in “5 Things Your Kids Should Know Before They Inherit Your Money.”
Much of what your children will need to know depends on how they are receiving your wealth. If you are leaving them the money in your IRA by designating them as beneficiaries, they will need to know the best way to handle that IRA, when they have to make withdrawals and what they are not allowed to do without facing severe tax consequences.
If the money is being left to them through a will or a trust, they will need to be informed about what to do with that.
The best thing to do is to sit down with your children and talk to them about what they might receive and how they should handle it. It is also a good idea to let them know who to trust for financial advice, should they have questions after receiving their inheritances.
An estate planning attorney can advise you on creating an estate plan that fits your and your children’s specific circumstances.
Reference: Nasdaq (Jan. 29, 2018) “5 Things Your Kids Should Know Before They Inherit Your Money.”