Parents have a lot to plan for when they start a family. They worry about everything from where they will live to how they will pay for their children’s college someday. Every parent wants to be sure their children are taken care of, and one way to do that is to consider what — if any — inheritance will be left to them.
Leaving an inheritance to children is not uncommon, although there are many California parents who choose other ways to distribute assets, such as charitable giving. Every person must weigh their options and consider what may be in a family’s best interests before deciding whether to leave an inheritance to kids.
An inheritance can be a huge benefit and relief to heirs, particularly if they are prepared to handle the sudden wealth. Conversely, it can be squandered and mishandled if a person is not capable of managing the influx of money. That is why there are a few things parents may want to look for in order to determine if they are comfortable leaving a sizable inheritance to a child.
- Good financial decisions: Of course young people make mistakes when it comes to finances. They may overspend or misuse a credit card. However, learning from their mistakes and learning to make more responsible decisions can be strong indicators that a young person is prepared to manage an inheritance properly.
- Self-reliance: Young people who earn their own money often have a more concrete understanding of the value of money. Having a job and pursuing individual interests can be a sign of independence and parents may have more faith that a child will use an inheritance wisely if they have indicated that they have a drive to do something.
- Focus on the future: Leaving an inheritance to children can make parents feel uneasy and concerned that they will spend it all right away, instead of saving it and spending it more wisely. Children who have goals for the future (such as college, family or career ambitions) may be more equipped to appreciate the long-term benefits of an inheritance.
Keeping these and other factors in mind can be crucial in leaving an inheritance you can be confident in. But whether parents decide to leave an inheritance or leave their assets to other parties, it can be important to develop these plans with a qualified estate planning attorney.
Source: Forbes, “Why You May Not Get An Inheritance (And What To Do About It),” Robert Pagliarini, April 30, 2014