If you’re one of those many Houston parents who’s spent your life growing your nest egg, then it’s likely that you have done so, in part, to have something to pass on your children when you’re gone.
It can be very daunting thinking of the prospect of leaving behind significant assets for your kids. You may worry that they will squander their sudden wealth. If you want to minimize the risk, it’s wise to plan ahead.
Equip your children with a money-smart education
An article recently published in Forbes magazine highlighted how important it is that parents don’t just set up trusts for their kids to receive distributions from once they’re gone but also provide them with financial education.
That article’s author highlighted how the younger a person is, the more likely that it is that they will struggle with budgeting. They pointed out how this often results in young people squandering their assets more quickly than they should.
The author noted that the most prudent step a parent could take was to educate their child on what constitutes wise money choices. They highlighted how encouraging them to use spending apps was a good starting place for this.
Give your child a heads-up about their inheritance
Giving your child a head’s up as to how much you plan to leave them is key. This knowledge allows them to begin formulating ideas about what to do with the funds they will ultimately receive, including preserving or growing its value. Letting them know what to expect to receive can also give you time to discuss what options they have for the funds and the pros and cons of making certain choices.
Is an incentive trust right for you and your children?
One type of trust that may be ideal for you and your family is an incentive trust. It may allow you to reward or penalize a child for making select life choices, both good and bad. This trust carries with it many tax savings benefits as well. Please continue to explore the wealth of resources on our website about the pros and cons of different types of trusts and other estate planning options to learn more.