Preparing your heirs for sudden wealth can help prevent unwise spending.
If you have wealth to transfer, you may worry about the, sometimes adverse, effect of sudden wealth and the squandering of assets within a generation. Here are some options to help ensure your legacy lasts.
Consider taking advantage of a trust
Trusts can help eliminate some of the guessing game of where money might end up, while allowing you to dictate how and when your assets are distributed after you die.
For individuals with relatively young heirs, age provisions that dole out trust income to beneficiaries only when they’ve reached certain ages can be beneficial. A common threshold for distribution is reaching age 18 or 25. Generation-skipping trusts are another helpful vehicle. Trusts can last up to 120 years, allowing you to transfer money to your grandchildren or great-grandchildren.
Connect through philanthropy
Making charitable giving a family affair can provide opportunities to connect with younger generations and communicate values and ideals. When a philanthropic mission is shared among your family, it provides a forum for communication and allows you to learn more about what matters to each individual family member.
Talk to your heirs about your vision
Talking to your family about your hopes for your estate after you pass away is a difficult conversation to have. However, avoiding these discussions may lead to unrealistic expectations, conflicts within the family and missed financial planning opportunities. To help prevent a communication breakdown, consider sharing history, values and a vision for the future of your family. This can be done in person at a family gathering or through a written statement, also known as an ethical will or legacy letter. With a common purpose and shared story, your family stands a better chance of preserving assets for future generations.
Leverage a professional’s perspective
Get in touch with your wealth manager for more advice on maintaining intergenerational wealth within your family. They can play a key role in education you and your family about inheritance, as well as wealth management and its important principles.
Creating a lasting legacy is neither easy nor impossible – the difficulty lies in the details. Finding the tools and resources that will benefit your family and situation can help towards creating an inheritance that lasts generations.
Sources:
5 Myths About Generational Wealth You’ve Likely Heard – Heritage Investment Group, Tower Street Finance, HM Revenue & Customs (HMRC)
