Preparing your adult children for inherited wealth is a crucial part of estate planning. Here’s a concise six-part framework to guide you:
- Review Your Estate Plan Regularly
Annually review your estate plan with your financial adviser to ensure it reflects your current wishes. Sharing the general outline with your children can help them understand your intentions and manage your affairs when needed.
- Consider the Impact on Your Heirs
Inheriting wealth can affect your children differently. Encourage them to assemble a team of financial, tax, and legal professionals to help manage their inheritance effectively.
- Promote Responsible Behavior
If you have concerns about a child’s financial habits, consider setting up a family trust with specific conditions for releasing funds. Discuss how their abilities and goals align with managing complex assets.
- Set Realistic Expectations
Have an honest conversation about what your children can expect to inherit. This helps prevent unrealistic expectations and ensures they are prepared for their future.
- Shore Up Your Plan
Identify weaknesses in your estate plan and your children’s financial skills. Work with your adviser to implement strategies that protect your assets and promote responsible management. Consider appointing a professional executor and finding mentors.
- Clarify Your Intentions
Your estate plan is about more than just passing on assets; it’s about passing on values and experiences. Share your hopes for how your children will use their inheritance to benefit themselves and their communities.
By following this framework, you can help ensure your children are well-prepared to manage their inheritance responsibly, it can also flush out any potential future conflict. If you have any questions, please contact your adviser we are happy to discuss this outside of your annual review.
Sam Martin CFP®
Authorised Representative (No 252676)
