Best Inheritance Advice Wealthy Parents Must Follow

*This is a collaborative post*

Being a wealthy parent is an opportunity to leave your assets to your kids. But everything boils down to good inheritance planning, specifically if you have multiple heirs. Distributing assets can be problematic if you fail on the planning front. Not educating your children about managing the wealth they inherit is another blunder you must avoid. You may end up bequeathing your wealth to people who hardly know how to safeguard it, and your assets will probably not stay in the family forever. But you can implement a few measures to protect your assets during your lifetime and later. Let us share the best inheritance advice that wealthy parents must follow.

Educate your children about finances

If you have a robust asset portfolio to bequeath to the next generation, start by educating them in the first place. Although people learn the basics of personal finance in school, it is seldom helpful to manage the sudden inheritance of money. You must do your bit to educate them about the value of money. Also, teach them the formula to grow their assets and ensure they understand the significance of philanthropy.

Prepare your heirs for a financial test

Besides educating your kids on money, prepare them for a financial test. In fact, you must take small tests to ensure they understand and follow your teachings. Pick age-appropriate experiments to assess their money skills. For example, let teenagers manage their monthly budget, give young adults the duty to pay monthly bills, and ask them to make a sound investment with a small sum. Observe how they address their tasks and whether they accomplish the goals you expect them to achieve.

Stay ahead of equity transfers

Transferring equity is perhaps the trickiest part of managing your assets as a parent. Expect things to be more complicated if you have several kids. The last thing you want is disputes over your property after your passing. You can avoid such issues by staying ahead of equity transfers during your lifetime. You can Compare transfer of equity quotes to get experts doing it for you without spending a fortune. A transfer of equity with expert assistance enables you to streamline the gifting process and prevent disputes down the road.

Use incentive trusts

You may feel apprehensive about your children losing their ambition and drive as they get a massive inheritance. Using incentives within a trust instead of leaving a large inheritance outright is the best solution to motivate your kids. Think of creative incentives such as matching the trust distributions with the child’s income. The clause will encourage your children to chase professional success rather than live on the inheritance money.

Think beyond bequeathing cash

Think beyond bequeathing cash to your kids and consider consolidating their financial future in alternative ways. You can use your federal gift exclusion to pay down your child’s school loans or mortgage principal. The tactic may not put cash in their hands today, but it may surely help the child’s future financial position. Reducing their loan burdens is the best thing you can do for your kids.

If you are wealthy, you will definitely want your kids to reap the rewards. But you must do it responsibly instead of passing on a windfall without planning. Follow these tips to make the inheritance as sensible as possible