If your children are younger, you might be concerned that they might not be ready for the financial responsibility that comes with an inheritance. Maybe they won’t spend it prudently. In fact, a lot of studies show that inheritances – regardless of the age of the beneficiary — are spent within 18-36 months. Especially if you have younger beneficiaries, this is something you will be concerned about. So you might want to think about setting up your planning so that your children don’t receive it right away. Maybe you appoint a trustee to handle it for them until they are a little bit older and a little bit more responsible. Maybe you want to spread the funds out over time rather than a lump sum all at once.
There are actually a lot of studies about inherited wealth — that it is very similar to things like lottery winners or when you see professional athletes or professional musicians or performers. That once they retire, then suddenly we are hearing a few years later that they are in bankruptcy. And people always think, “How could that be? They made millions of dollars.” But it’s the same idea that any sort of sudden windfall, most people are not prepared for that. They don’t have a good grasp on how long it will really last and how to make prudent use of those funds. So a lot of time in our planning, we might want to think about that. How can we protect beneficiaries from themselves? Maybe have someone manage it until they are a little bit older and are more prepared for that responsibility.
If you have minor children, make sure you download our guide to Children’s Safeguard Planning, so you can learn more about how to have the most protection for your children.