You’ve always been an entrepreneur, and you’re proud of the tidy little empire you’ve built. You’ve been an excellent provider for your family — but you’re very conscious of the fact that it can be hard for people to manage inherited wealth without losing it all.
Experts say that inherited wealth can be difficult to hold onto because the people who inherit it are coming into the situation with very different backgrounds and experiences than the people who made the wealth in the first place. A parent who has struggled with the ups and downs of entrepreneurship will likely have developed cautious habits that anticipate problems. Someone who has pretty much always been wealthy may lack those same principles or understanding of risk.
How do you pass on your assets safely? Consider these steps:
- Talk about money with your family. Far too many people avoid discussing the issues of inheritance and money with their families because they’re unpleasant subjects. However, talking about your goals and your hopes — and your plans — can help everyone get comfortable with what will happen when you are gone.
- Teach your children about budgeting. Don’t instantly gratify every wish your child has. Give your kids a budget and teach them to manage their expectations and desires so that they learn to make good choices and prioritize needs over wants.
- Give your heirs early access to some of the wealth. If you plan to pass your wealth along, let your heirs take control of a small amount of the money to pursue their dreams while you’re still around. Even teens can start making investments or use “seed money” for a small business. These “financial training wheels” may pay off later.
- Consider a trust. Trusts can be an invaluable part of an estate plan. They can help you preserve the vision you have for your heirs and your overall legacy — while also protecting your heirs from major mistakes and financial abuses.
Whether you have a great deal of wealth to pass on to your heirs or are of more modest means, it’s wise to have an experienced attorney help with your estate plans. Find out more today about your options.
