I am seeing more and more situations where a client or someone I know is going to inherit significant wealth, but their family, who is currently living and has the money, doesn’t want to discuss the details. This is usually a parent / grandparent leaving money to their kids / grandkids.
Money and death are two of the most private and uncomfortable topics to discuss so we avoid them. This is COMPLETELY understandable. But, by avoiding the conversation, parents are missing out on a great opportunity and potentially causing harm to their kids.
This next part is for the parents / grandparents! Let’s start with the reasons why you leave money to your kids / grandkids. Then we will look at the benefits of discussing this with them.
I see you leave money to your kids for the following reasons:
- You have more money than you need in your lifetime so you assume it’s “what you do”
- Avoid estate taxes
- Be generous to your kids and share your wealth
While your motivation may be clear, the benefits of discussing this with your kids may not be:
- You have invaluable financial wisdom. You have gained this wisdom by walking through life and via trial and error. Why not help the next generation by passing on some of that wisdom?
- You can help eliminate confusion when you are gone. Your estate and money WILL BE discussed; either before you pass or after. Why not help your family now so they don’t have to do it when you’re gone?
- You can get a sense of how ready your kids are to inherit this amount of money. If you think your kids aren’t ready, maybe they don’t need to inherit all of it!
Bottom line, when they are old enough, talk about this with your family! Before you do, run it by your financial advisor since they have dealt with numerous situations like this before. If you aren’t sure your kids can handle the inheritance, maybe you should rethink your overall estate plan!