Estate Planning Tips: What Your Kids Need To Know About Inheritance?

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Estate planning is an essential element for property owners. Whether it’s real estate, jewelry, company shares, or other assets, it’s essential to devise a plan before you leave everything for your children.

When you have an estate plan, it can make it easier for the inheritors to settle the matters after you’re gone, making it easier to avoid disputes and emotional stress. However, it’s pretty interesting that only one-third of the US population has an estate plan, and many haven’t revised them in the last five years.

Managing the inherited assets is the most critical part of an estate plan, but the inheritors must be aware of your plans too. So, while you prepare an estate plan for your assets, it’s also essential to prepare your children and inform them about inheritance-related matters. In addition, it’s essential if you have various types of assets.

So, in this post, we will discuss some valuable estate planning tips and look at some essentials to pass on to your inheritors.

What is Estate Planning

Estate planning is designing tasks that help manage a person’s property when they are no longer around. For instance, if a person owns different assets, an estate plan will help determine the inheritors, property managers, and other key players to divide and allocate the assets without conflicts.

The estate planning law also serves as a template to guide estate planners about inheritance and other related matters. Typically, an estate planning lawyer provides legal assistance in preparing an estate plan.

 An estate planning lawyer can help you devise a comprehensive estate plan if you need legal assistance. In general, people use an estate planning checklist to assess their assets, liabilities, and allocations.

Why It’s Important to Talk to Your Kids about Inheritance

Most parents don’t talk to their kids about inheritance. However, if you have adult children, sharing your plans and conducting a general discussion is a wise option. It’s not just about mentioning who gets what. Instead, it explains the importance of responsible money management and other assets.

Responsible Use of Money

When children aren’t aware of what they might receive, they won’t be prepared to use it wisely. In that case, it won’t matter if you leave $100 or $10000 behind. However, if you talk to them, they might be mentally prepared and make wiser decisions with whatever money they receive as an inheritance.

Sentimental Attachment with Assets

If you have different assets like jewelry, collectibles, decorative pieces, artworks, etc., a unique or sentimental value might be attached to them. Hence, when you tell your children how much you love a specific asset and want them to preserve it after they are gone, they are more likely to take better care of the inherited stuff.

Understand Children’s Priorities

When you open up about inheritance, you will also realize how your children perceive your assets. For example, they may talk about their plans, like investing capital in a new business, saving for their future, etc. Hence, it also helps you understand which assets to allocate to specific children.

What to Consider While Sharing Inheritance Matters with Your Kids

Here are some essentials to make your inheritance discussion with your children more productive.

Talk about Responsibilities and Opportunities

It’s not about sharing your bank statements and wealth status. Instead, it’s essential to talk about the responsibilities that come with more significant sums of money. Talk to them about different opportunities and what they can accomplish with the money they receive as an inheritance.

If you don’t do that, it’s easy for children, especially baby boomers, to think of the inheritance as a one-time windfall that they might spend on short-term goals like buying a car, paying college tuition fees, etc.

Share Your Estate Plan

Your children must know your estate plan. Including them in your discussion with the estate planning lawyer is a good idea. This way, your children can receive more comprehensive legal guidance about inheritance matters and how they would be more responsible in dealing with financial matters after you’re gone.

Moreover, sharing asset distribution as per your estate plan makes it more straightforward for the kids, so it’s smooth for them to manage asset allocation later.

Share the Value of Financial Management

Financial management isn’t something only for adults. So it’s a good idea to engage children with such activities to prepare them. For instance, you can give them a small amount of money and set specific tasks like saving, buying something helpful, or spending it on charity.

As your kids practice the art, they become more responsible and wiser in spending the finances and may develop worthwhile goals. As a result, you can ensure that your money won’t be wasted after you’re gone.

Discuss the Role of Guardianship

Every estate plan and will has a well-defined guardianship role. It allocates to an individual the responsibility of looking after the children and their belongings after the property owner has gone.

While picking the proper guardian is critical, it’s also important to talk to your kids about the role of guardians after them. Thanks to a clear-cut discussion about the role of guardians, your kids and other inheritors will know who to look up to and how to use the money after the deceased.

Handling Unequal Inheritance Matters

It might be the most challenging job as a parent, but it’s a critical discussion. While your estate planning lawyer may advise against it, it is possible to allocate unequal assets to different children.

For instance, one of your kids may be well-established, while the other needs more to pay off their college fees. In any case, you must ensure that every inheritor is on board and satisfied with the distribution.

It may take some convincing and enforcement of your decision, but it will make your life much easier as inheritors could avoid conflicts later.

Conclusion

Talking about inheritance can be an uncomfortable situation for most people. However, if you understand its value, an estate plan and inheritance discussion could be vital for the inheritors, helping them spend your leftover assets wisely. More importantly, it keeps families and asset owners from unwanted conflicts and confusion.