How to Talk to Your Adult Kids about Inheritance

 

For some people, it may be that time to start thinking about what will happen after your death. What do you want happening to your money, home, or anything else that you own? Do you have children? Do you want to talk to them about what they could be inheriting? Below are some tips, along with the biggest challenges regarding talking with your children about their inheritance.

 

1. Think about what you want. What’s important to you that you children do with your money.

2. Discuss aspects of your estate and children’s inheritance through multiple conversations. That way you don’t put too much on them. Overwhelm them.

3. Explain why you made the trust/inheritance the way it is. Certain payment each year, etc

4. Give your children chance to talk and voice what they want/think. If they want to change a certain stipulation in estate, hear them out if they have good reasoning.

5. Bring professionals into conversation if needed or wanted. 

6 Be sure to avoid probate. Learn How to Avoid Probate Court

 

4 of the Biggest Challenges You Can Run into When Talking to your Adult Children about Inheritance

 

1. It is a given that your children receive inheritance?

Do you think your child is entitled to an inheritance? Maybe not? Parents and children can often have very different opinions on whether or not they should be entitled. Some parents have certain guidelines children must follow in order to get their inheritance. Some children want nothing to do with the similar values or traditions their parents had. 

 

2. Dividing up inheritance. Should you make it equal or not?

Inheritance doesn’t necessarily have to be equal. You don’t need to feel guilty if you don’t make it equal. It is your money and you get to choose how to split it up. With that being said, it is okay to make it equal if you want. There can be other factors that you can also take into consideration. Does one child have student loans that you want to  help them pay off? Does another child have a disability or illness that costs them a lot of money and you want to    help out? These two are just a few of the many different factors that you can take into consideration if you want to. Whatever you decide is you decision because it’s your money.

 

3. Should the number of grandchildren be considered in which child receives more?

One of your children gave you 2 grandchildren whereas your other child gave you 4 grandkids. Should you take this into consideration and give the 4 grandchildren more? Or do you give one equal sum to be split which leaves the 4        grandchildren receiving less proportionally? Or do you provide an equal amount for each grandchild, not bringing into consideration which family they came from? Your children may also want to be involved in this deciding process. 

 

4. How exactly should the inheritance be distributed?

Some parents can be wary when it comes to their children receiving one large lump sum after their death. Will they save it, invest it? Will they spend it immediately? These are things that need to be taken into consideration. Is a trust with distributions a better choose for your and your children’s situation?

 

Solutions to the Biggest Challenges:

 

1. Communication among all family is key. Include son/daughter-in-laws, they can play large role

Establish lines of communication early. There is no benefit in trying to hide the facts of your own estate. More time for discussion allows for more factors regarding the inheritance to be worked out, allowing there to be less room for conflict to occur after your death. It may also be beneficial to have a third party overseeing all communications. You can also use this time for teaching your children how estates, inheritance, trusts or similar things work. In the end, don’t forget to think about possibly including your son/daughter-in-law. They may be playing a large role in finical decisions. 

2. Have your children start engaging in financial choices at young age

To prepare your children for a possible large amount of inheritance, it may be a good idea to get them involved in making and thinking about financial decisions at a young age. This will allow them to make sound rather than rash decisions regarding their inheritance. You can start with having your children keep a budget of your grocery store visits each month or ensure they understand their student loans and interest that incurs on top of it.

 

3. Continually update your estate plans to reflect changes such as marriages, death, or education

Many people develop their estate plan and then put it aside. This could be asking for a disaster. In reality, things can change any minute, whether it’s a new addition to the family such as a marriage, or a death in the family, or even the process of spending more for college. Estate and inheritance plans should be updated every 1-2 years depending on different situations. Being proactive will only make it easier for your children after your death. 

 

4. Implementing a trust with trustees can be very beneficial

Having a trust can be very helpful in regards to distributing your money after your death. Trusts can be beneficial to children in their twenties or thirties who may not be completely responsible. Assets are held within the trust and are distributed based off of the wishes of the creator of the trust. Trustees are those that become in charge of the trust after the creator passes away. Trustees can help guide things such as investments held within the trust. The creator of the trust may also want to consider who to appoint as trustee. Family members can often cause risks or other unnecessary hurdles for the trust. The creator of the trust can also hire a professional corporate trustee to do the job. 

Trusts can help to avoid probate. Learn How to Avoid Probate Court

Overall, it is important to talk to your children about their inheritance and what will happen after your death. There may be times where it is difficult or hard to talk to your children but if you follow these tips and advice, you should have the best possible outcome.

We highly recommend seeking the legal counsel of an attorney who specializes in estate planning, trusts, and asset protection. None of the information on this page or site is to give legal counsel or advise. All content on this website is intended for general information only, and should not be construed as legal advice, tax advice, or financial advice. Before taking any action based on this website you should consider your personal situation and seek professional advice.