MEDICARE 2024 FIGURES MEDICARE PART A: HOSPITAL SERVICES Inpatient hospital deductible $1,632/illness Daily co-insurance…
It can be challenging to address and legally formalize the inheritance of family values and assets. It becomes even harder for parents who wait too long to try. Undoubtedly the best time to teach and empower your children to inherit your family legacy is during childhood, and continuing that encouragement throughout adulthood. If you wait until later in life to discuss family values and handling inherited worth, advice can be often ill-received. Grown adult children prefer not to feel parented anymore, particularly when they are raising children of their own.
Each Generation Does Things a Little Differently
There is value in passing spiritual and intellectual ideas to the next generations. While older generations embrace this notion, it is also important for them to work with their heirs rather than dictating their ideas. While the directions taken by newer generations will likely differ or be at odds with their elders, there can still be a deep sense of service and responsibility to family values and stewardship of inherited wealth. Allow your children to exert their influence over the family enterprise early in life and make adjustments that create synergy, connection, and like-mindedness.
Using Trusts Minimizes Disappointments and Conflicts
Most families do not interact perfectly and miscommunication is typical. The more affluent a family is, the more likely dispersing assets is to create severe fallout. A 20-year study by the Williams Group determined a 70 percent failure rate, including rapid asset depletion and disintegration of family relationships during and after inheritance. Establishing inheritable trusts can provide real benefits by:
- Avoiding probate
- Reducing time to handle estate matters
- Allowing for privacy
- Eliminating or reducing estate taxes
- Making pre-nuptial planning more effective
A parent who wants to control outcomes should focus on trusts instead of trying to manage their future adult children’s behavior.
A surefire way to inspire conflict is via “dead hand control,” or trying to control lives from the grave. If you put excessive restraints on an adult child’s inheritance, they will often feel that they are mistrusted to handle wealth. Instead, consider enrolling them in a few classes about managing wealth. Spark an interest to learn how you have created wealth, the mechanisms you used, and what their future endeavors may look like long after you are gone. Formally educate your children about finances early. Instead of talking about who gets what, shift the conversation to wealth management.
Allowing for Flexibility
Estate planning attorneys encourage trusts with flexibility. If a beneficiary is genuinely incapable of making the right decisions, a trustee can be appointed to make distributions in the beneficiary’s best interest. This trustee’s discretionary power can help a well-funded trust survive for generations.
You can also write a letter of intent to your children. It is not legally binding, but it gives you a way to remind them of family values and your desire for these values to be maintained for future generations. Convey your vision for how your wealth can bring growth and a chance for fulfillment to your beneficiaries.
Prosperity should positively shape lives. Family trust beneficiaries hopefully already have a self-driven life that includes purpose, responsible behavior, and a basic understanding of personal finances. If you worry your children may squander inheritable assets, create the opportunity for them to succeed through financial classes that teach them about managing their family legacy. Address your concerns legally and directly through a detailed trust that can guide them without forcing your vision of what they can become. Start an honest conversation early on and remember it is never too late to make good choices and positively influence the coming generations.
“In the final analysis, it is not what you do for your children but what you have taught them to do for themselves that will make them successful human beings” – Ann Landers
If you’re interested in establishing a trust to pass wealth to your children, we can help guide your family to pass on family values in a meaningful way. Contact our office at 1 (800) 680-1717 and schedule a consultation to discuss your legal matters. We look forward to the opportunity to work with you.