One of the biggest concerns that keeps people awake at night is whether the hard-earned funds or assets they’ve amassed will be squandered by their heirs.
The good news is that you’re not helpless in this situation. What can you do to make it easier for your adult heirs to manage their inheritances wisely? Here are some suggestions:
Don’t keep money matters secret from your kids
Many parents make a mistake that establishes a poor financial foundation for their kids because they don’t discuss finances with them at all. It’s good to give your heirs information about bills, strategies for money management and investment tips.
The best thing that you can do now is to educate them about these concerns and any inheritance they can expect to receive. Educating your kids about money matters is particularly of critical importance if you have rare assets or unique insight into preserving or growing their value.
Giving your kids insight into their inheritance and how you have successfully managed assets can give your child solid financial insights from which to devise their own strategies for growing the wealth that you leave behind to them.
One good starting place for educating your child about being investment savvy is to give them an education in budgeting. This will teach them not to blow an inheritance early on but to be deliberate when doing so. You may also want to have them take online classes to educate themselves about making monetary decisions.
Various trusts exist, and you can draft instructions for when and how you want disbursements to occur. You can choose, for example, for disbursements to be more like an incentive when a beneficiary accomplishes a certain goal instead of a regular stipend that they receive every month. You’ll want to take time to learn about different trusts and their limits before deciding how to best begin preparing your child for their eventual inheritance.