When creating a will, the first thing people think of is who will inherit what but not many of them think of how much they want to leave their heirs. It’s always good to plan how much you want to leave your heirs and when they should receive their inheritance. If it so happens that you pass away when your children are extremely young then you should consider setting guidelines to your will which would allow them to inherit your assets when they have matured.
Leaving a large sum of money to your children could be disastrous since they have not matured fully to put their inheritance to good use. It is likely that their guardian would manage their inheritance until they have reached the legal age. However, the legal age may not be the right time for them to inherit these assets or money since they haven’t matured fully. According to an article published by The Balance, testators have the option of creating a trust fund where their heirs can receive their inheritance once they’ve reached a certain age or achieved a certain goal. Another option is for beneficiaries to receive one or more lump sum amounts in stages, this will ensure that your beneficiaries don’t use up their inheritance frivolously.You could also set up the trust to pay for any college costs, medical bills or a car. This will ensure that your children or loved ones are financially secure once you’ve died.
Once you’ve settled into adulthood, your main priority would be to make the necessary precautions for your family to be comfortable when you are not around. However, one can never plan when they pass therefore it becomes tricky to decide how you would like your assets to be distributed. It would be advisable to set up structure within your will where you children are able to receive your inheritance in increments. This will ensure that your heir doesn’t spend their inheritance all at once. As a parent you will want the best for your children so you hope your inheritance will help them get through tough financial situations. It is safe to assume that those who have acquired a large amount of wealth through hard work understand the value of money and would like their heirs to have the same perception. They not only want to pass on their wealth to their children but also pass on a good work ethic. Leaving large sums of money to your heirs might make them take for granted values like hard work and a good work ethic.
It is imperative for parents to teach their children financial literacy and the value of money so when they eventually inherit your assets they will have the tools to invest and multiply these assets. This sort of preparation can start from a very early age as no one is in control of how and when they will die. Wealth advisors suggest you can educate your children on financial literacy from as young as seven years old. Estate planning is always done under the assumption that parents are doing what is best for their children. As mentioned previously you can set up an incentivised trust for your heirs. However, parents should be careful not to create any resentment with this sort of trust as it can be perceived as dictatorial.