One of the primary reasons some heirs fail to behave prudently with money is they have never been forced to do so. Just as government bureaucrats spend taxpayer dollars too freely, so do children who grow up with the security of knowing there is a ready supply of funds whenever needed. Unfortunately, the parent whose adult child has a sense of entitlement assumes the child is incapable of change, and therefore never even asks him to do so. See
There are many steps you can take in planning your estate to restrict and control the timing and amount of distributions to beneficiaries. There is no shortage of attorneys ready to draft will and trust provisions to carry out your wishes. Trust companies will expertly manage your childís inheritance and tightly control disbursements. But resorting to these measures is very expensive and your child may still squander his inheritance.Another important step in effective estate planning is to communicate with your heirs directly about how you want them to use assets inherited from your estate. Instead of waiting for them to learn the terms of their inheritance from an executor or trustee, it is much more useful if they hear it from you, in your own words.If you decide to talk with your children or grandchildren about money, you may come to understand why so many people seek to avoid it. It is much easier to have a one way conversation in a last will or estate plan letter than an open dialogue in which the other party can ask questions, make demands or hurl accusations. However, there is no substitute for the leadership we receive from a parent or grandparent. The most painful conversations with family are sometimes those in which we learn the most about the other person and ourselves. The impression you leave on your child about how to use an inheritance may have a great impact on the person they become. Even if your words seem to fall on deaf ears, they may resonate with your child after you are gone.
Have You Communicated Your Wishes Regarding Inherited Property to Your Heirs?
Will your heirs act responsibly with an inheritance? If you are like the majority of parents and grandparents today, you probably expect the worst. According to a 2011 survey by US Trust Bank of America Private Wealth Management of high net worth and ultra high net worth clients, a significant percentage of those surveyed have concerns about whether their children are prepared to handle an inheritance.This survey also sheds light on the lack of communication about estate planning, inheritance, and family wealth prevalent among parents and children. As an estate planner, I believe this reluctance on the part of testators and grantors to discuss how family money should be used is an issue that should be addressed.
When individuals with a sizeable net worth engage in estate planning, they usually have strong opinions about how they wish their money to be used by their beneficiaries. For example, they typically want to ensure their children are financially secure and that grandchildren will have adequate funds for college. They may also want to ensure continuation of a family business or the ability to continue to own a concentrated stock position. After those objectives are met, they often want their heirs to engage in some type of charitable giving or philanthropy. Most people in a position to bequeath substantial assets worked very hard to accumulate their wealth. Wasteful spending and extravagance by their heirs is something they generally wish to avoid.
Despite how todayís seniors and Baby Boomers would like their legacies to be handled by the next generation, estate planning professionals are hearing clients express increasing concerns about the inability of intended beneficiaries to manage money. At the same time, many of these clients are reticent with their children on the issue of spending. Even if the testator includes provisions in his estate plan to have an heirís inheritance managed by a professional trustee or another third party, he may not be comfortable talking with his adult child face to face about the intended use of inherited money.This article outlines several different ways to address your concerns about leaving an inheritance to your children, grandchildren or other heirs.
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