Over the next three decades, Americans will transfer more wealth than ever before — an estimated $6 trillion dollars — as the World War II generation and Baby Boomers reach the end of their lives. Sadly, too many people aren’t prepared to deal with a significant inheritance. It’s estimated that 70 percent of assets transferred to the next generation are lost. Ninety percent don’t make it to the generation beyond that.
Even people who are responsible about developing an estate plan often fail to discuss the importance of saving and investing that money wisely with their heirs. Even fewer discuss how they’d like to see their life savings be used by their families after they’re gone so that the values they cherish are honored.
Of course, financial literacy begins in childhood. As kids get older and start to earn their own money, that education needs to continue. Parents can include them in family budget planning meetings so that by the time that kids are out of college and living on their own, they should know how to make a budget for themselves.
However, inheriting a significant windfall of cash can be an entirely different matter. If you’re going to be leaving your kids a good deal of money, it’s best that they are introduced to wealth planning professionals and financial advisors to help them make that money last.
Some people include what’s called an “ethical will” in their estate plan. The contents of an ethical will vary with each individual. Some people use it to pass on family stories, perhaps about how your parents built a family business from scratch, that help your children understand the genesis of your money. Other people use it to pass along values that they hope their heirs will model and continue to pass on to future generations
It’s important to note that ethical wills aren’t legally binding documents, as traditional wills are. Therefore, if you want part or all of your estate to go to specific organizations, the best way to ensure that is to name those organizations as beneficiaries. Further, if you’re concerned that your children aren’t prepared to handle a large inheritance, you can work with your California estate planning attorney to plan for a gradual release of assets. Your attorney can help you determine how best to leave the legacy you desire.
Source: Spotlightnews.com, “Inheritance and the passing along of financial values,” John McIntyre, accessed Sep. 21, 2016