Most parents plan to leave an inheritance to their children, but they often do not go far enough in planning how much to leave, and when their child should receive it. But before any fancy planning is done, you need to first ensure the basics of estate planning are covered. This includes putting insurance in place if needed to care for your immediate family, cover debts, or business issues and to ensure you have a valid will. Once the basics are taken care of, then you need to look more closely at what you are leaving your children and the potential consequences of their inheritance.
First, reviewing your net worth statement (what you own less what you owe) will help paint a financial picture of what you will likely be leaving behind. If the value of your estate will be significant, please use some thoughtfulness in how, and when, this value is transferred to your children. There are many estate planning resources and professionals who can help you come up with a solution to implement your wishes. Arguably, this is the easiest part of estate planning.
The harder part is opening up the conversation with your children regarding the wealth they will inherit, and ensuring they’re financially educated to manage it effectively. This is also an opportunity for you to communicate your values as they relate to money and to share some of the lessons you have learned over the years.
Recently someone told me that while he was still a teenager his father, who was struggling with cancer, introduced him to his financial advisor. After his father passed away, this advisor became a trusted resource for him and his siblings. So looping your kids into your professional relationships, such as Portfolio Managers, Accountants, and Lawyers will best equip them for the next stages of their financial journey.
Maria Dawes, Portfolio Manager
Capstone Private Wealth