Inheritances can be a wonderful support for those who receive them, but investors may struggle to decide how much to leave their beneficiaries and when they should give it to them. If you have been investing for some time, the idea of giving away your assets might be difficult in and of itself. However, if you plan correctly, this can be a good move for your beneficiaries.
If you plan to leave money to your children, there are a few factors to consider. These include:
- The relationship your child has with your family
- The type of trust or trusts you want to set up for them
- How you'd like to communicate your plans to your family
Some believe that letting children know about large inheritances does them a disservice because they plan to rely on it in the future. You may decide to forgo that discussion and leave the money behind in a trust with strict terms, so your children won't spend too much too quickly. You can also discuss your plans with your spouse or other family members, so they know your wishes.
When planning on what you'll leave to your children, think about their personalities. Some children are great with saving and spending smartly. Others don't manage money well. Take the time to set up a trust that accounts for their likely behaviors.
Overall, trusts are good protection for inheritances. Inheritances can do a lot of good for your children, but you deserve to know that the money will work for them and not against them in the future.