- One good way to avoid raising entitled “trust fund babies” is to have clear and consistent communication about your estate plans early in a child’s life.
- Let heirs see your financial statements and estate plans as soon as you think they’re mature enough to handle them. Use an advisor or estate planning attorney to walk them through the process and familiarize them with your wealth transfer and legacy goals.
- It’s natural to want to help your children financially, but respect a child’s or grandchild’s need to make his or her own way in the world. A generation-skipping gift can sometimes be more valuable and tax-efficient.
From insurance and investments to disability and death, there are so many risks involved with our money. But one risk we don’t think about much is how we’re going to tell our children and grandchildren about our money and our estate plans. We want our offspring to be comfortable, but not so complacent that they lose their incentive to work hard or feel automatically entitled to our estates when we pass on.
One good way to address this fear is to have clear communication with your heirs. Let them see your financial statements when you feel they are mature enough to handle the information, and get an estate planning attorney or financial advisor involved early on to walk your children through your estate plan. “Here’s what it’s all about; here’s what happens when Mom dies or Dad dies.”
Also, you need to coordinate your estate planning. We have found that some of our clients’ children have become very successful and wealthy on their own. They may not want a parent’s money and may instead prefer to have it passed along to the grandchildren. Familiarize yourself with estate planning tools and techniques. Some of them can help you shield up to 50 percent of your assets from taxes when you transfer them to the next generation. It’s a huge deal.
Estate planning is also about sharing your values
What’s most important to you, along with this estate plan and these monies? Many children and grandchildren want to make their own way in the world, but recognize that a lot of assets may be coming to them at some point in their lives. They need to learn how to deal with the responsibility of receiving those assets and better understand how they can deal with their own monies as they move along through life.
I’m bringing all this up because National Estate Planning Awareness Week is coming up October 20 through 26, and last week’s post talked about that more. You need to be proactive with your estate plan and make sure it’s up to date. If you need help, go see your estate planning attorney or other trusted financial advisor to make sure all your financial affairs and legacy intentions are in order. Things change out there all the time. Laws change, your situation changes. Review your plan regularly. We’re here to help if you want to make sure your plan is still on track with your vision of the future.
Until next time, enjoy. Gary
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