The inheritance that your child receives has likely been cultivated through a lifetime of hard work on your part. Therefore, you don’t want to see your life’s work go to waste because your son or daughter doesn’t properly manage his or her newfound wealth. Fortunately, there are steps that you can take to minimize the odds that this happens.
Place the inheritance in a trust
Placing assets into a trust gives a beneficiary less control over how they are used. Instead, the trustee will determine when a distribution can be made, and the document’s language will determine the conditions under which this can be done. For instance, you can prohibit the trustee from distributing money to your son or daughter unless it will be used to pay for school, a house or a medical expense. Alternatively, you could require that the money not be disbursed for any reason until your child has reached a certain age.
Start talking about money at an early age
One of the easiest ways to help your children make smart money decisions is to have conversations with them at an early age. If your kids are already grown, it’s not too late to teach them about the differences between needs and wants. It may also be a good idea to teach them how to evaluate an investment opportunity or how to recognize if a charitable donation is going to a legitimate organization.
A family law attorney might be able to help facilitate these conversations if you don’t feel comfortable starting them on your own. An attorney may also be able to have regular conversations with other beneficiaries to ensure that they understand the structure of your estate plan.
If you have any questions about how to ensure that your children don’t squander their inheritance, it may be worthwhile to consult with an attorney. He or she may be able to review your existing estate plan to determine if it currently meets your needs. If not, a legal adviser may help you make strategic changes to a will, trust or other documents.