Preparing a child for receiving (or not receiving) an inheritance

| Dec 27, 2019 | Estate Planning

In many families, there is an expectation that a parent’s money and property will go to his or her children after death. However, that is certainly not always the case.

Leaving an inheritance to your child is an intensely personal decision, and one that you should have full control over. However, to protect your wishes and minimize any contention or unwelcome surprises, you should discuss the topic of an inheritance with your children.

Deciding not to leave an inheritance

Parents decide against leaving an inheritance for many reasons, like preferring to leave money to charity or wanting their children to make their own money. Whatever reasons you may have for withholding an inheritance, discussing your decision with your children can be important. This is especially true if a child is expecting to receive one.

As this article notes, discussing your decision can eliminate surprises that could disrupt your child’s future. It can also make clear your wishes so that there is no doubt or confusion when the time comes to administer your estate.

Having this discussion also gives your child the opportunity to understand and ask questions, which can be important for all parties.

Deciding to leave an inheritance

If you decide to leave your child an inheritance, it can still be wise to talk to them about it. Depending on their age, you could discuss what you hope they use it for or how to manage the gift responsibly.

You can also discuss any conditions of the inheritance. For instance, if you set up a trust to pay out every five years or after an event like graduating from college, explain this to them.

If you plan to leave a significant amount to your children, consider various tools to help them be responsible with it. Some parents have a child complete some financial education courses or meet with a financial advisor.

Protecting your legacy

Whether you plan to leave an inheritance or not, safeguarding your legacy with a sound estate plan can be vital. And communicating your plans to your children and loved ones can help them understand your wishes. Doing this can minimize fighting, eliminate confusion and protect the legacy you leave behind.