What and When Should You Tell Your Children About Their Inheritance?
As a parent, you’ve done all that you can to support your family. Now that you’re going through the estate planning process, you’re starting to think about how you’re going to talk to your children about the assets they will receive upon your passing. Specifically, you’re curious about what and when you should tell your children about their inheritance. You want the conversation to be as smooth and informative as possible, and let your children know you’re looking out for them.
Entz Burton & Associates, estate planning lawyers, have assisted Oklahoma families and family-owned businesses with estate planning and business law for over 30 years. Reach out to us today to schedule your free consultation and learn more about managing your inheritance.
Talking to Children About an Inheritance
Every family is different. There is no hard and fast rule when it comes to talking to your children about an inheritance or your estate planning process. However, it’s good to start talking to children about money early on. While you don’t have to tell them how much money you make or what kinds of assets you have, you can teach them about money and values.
For instance, if your children are still young, you can talk about how money can be used in a good way – to start a business you’re passionate about, help people in need, or pay for a college education. The best way to demonstrate your values is by living them. If your children see you giving money to charities, they are likely to do the same.
If you have adult children, then the situation is different. It’s best to think about how each of your children will react to the news that they have an inheritance by seeing how they deal with money now. For example, you may have no trouble telling one child who is responsible with money about it. However, if you have another child who is not good with money, it could be a harder conversation.
The bottom line is that you need to have a conversation. Even your children who are good with money may be thrown off when they receive their inheritance and assets. You should tell your children about it beforehand so that they can do their own financial planning. Also, if you are not splitting up the money evenly among your children, it’s a good idea to tell them why. Because, it’ll be less likely that your children will fight over the inheritance. They’ll know that it was your wishes and they need to abide by them.
Other Ways to Include Your Children
When telling children about the inheritance they are set to receive, you should bring up any other pertinent information when it comes to your estate plan. This would include the documents that are in your plan, any roles that your children may have, and your wishes for your end-of-life care. Also, let them know your estate planning lawyer’s name and contact information and where to find copies of your legal documents.
Your adult children who are going to be in charge of your estate when you’re gone will also need to know how to access your bank account, how to pay any leftover bills, and your logins for any other accounts they will be receiving.
You will have to tell your child if they are going to be acting as your power of attorney. This means they will oversee your legal, financial, and medical decisions should you become incapacitated or when you pass away.
Deciding What to Do With Your Money
It’s best to consult with an estate planning lawyer when you’re deciding how to handle the estate planning process. Make sure you start the process as early as possible. As you get older and your health starts to decline, it’s going to be much harder to think clearly about what you want to happen with your estate.
If you pass away with only a will in place, then your estate will go through probate, which is a lengthy and expensive process. The state oversees probate, and your estate will be made public. This means that anybody with a claim against the estate can come in and try to claim your assets, and it can cause conflict amongst your children.
But if you have a trust, you can keep your estate private. With a trust, your assets in the trust will automatically go to the designated beneficiaries.
There are two kinds of trusts you can look into: a revocable and an irrevocable trust. With the former, you can change it at any time. With the latter, you cannot change it once you create it. If you are in a profession where you are at risk of being sued, or you have creditors coming after you, then an irrevocable trust may be the better option to protect your assets.
Is Estate Planning Just for the Rich?
When you think about estate planning, you may think it’s only for high net worth individuals. This is not true. For example, a middle class family will typically leave behind around $110,000. That’s a large chunk of money, and it’s not worth it to let it go to waste. Doing whatever you can to stay out of probate and ensure your wishes are fulfilled is key.
You want your children to get as much as possible so they will have a more comfortable life. With the right estate plan, as well as an experienced estate planning lawyer on your side, you can do just that. Make sure you sit your children down and discuss your estate plan with them before it’s too late.
Estate planning is a significant step in ensuring that your hard-earned assets are distributed according to your wishes. It’s not just about deciding who gets what; it’s about leaving a legacy and providing for your loved ones even after you’re gone. An essential part of this process is having open and honest conversations with your family about your estate plan, especially when it involves distributing your assets among your children.
Creating a Transparent Environment
It’s important to foster an environment of transparency when discussing inheritance. Being open about your estate plans can prevent misunderstandings and conflicts among your children after your passing. It’s crucial to explain your decisions regarding the distribution of assets, especially if it’s not divided equally. This clarity helps maintain harmony within the family and ensures that your wishes are respected.
Involving Your Children in the Planning Process
Involving your children in the estate planning process can be beneficial. This doesn’t mean they make the decisions, but being part of the conversation can help them understand your perspective and the values you wish to pass on. It also prepares them for their roles, whether as beneficiaries or executors of your will.
Educating Your Children on Financial Responsibility
If your children are set to inherit a substantial sum, it’s wise to educate them about financial responsibility and management. Consider introducing them to your financial advisor or estate planning lawyer. This can provide them with the tools and knowledge to manage their inheritance wisely.
Setting Up Trusts and Guardianships
For parents with minor children, setting up trusts and guardianships is vital. This ensures that your children are taken care of financially and that your assets are managed responsibly until they come of age. Discuss these plans with your children, if they are old enough, to give them a sense of security and understanding.
Remember, estate planning is not just for the wealthy. It’s a crucial step for anyone who wants to ensure their assets are handled according to their wishes. An experienced estate planning lawyer can guide you through this process, helping you make informed decisions that align with your goals and values.
By approaching estate planning with openness and involving your family in the conversation, you create a legacy of love, respect, and financial security that extends beyond your lifetime.
Contact Entz Burton & Associates
If you need help with estate planning, then get in touch with Entz Burton & Associates today for your free consultation. Call us at 405-773-9800 or 800-633-7230, or contact us on our website. We look forward to hearing from you and helping you with all your estate planning needs.
Attorney J. Michael Entz at Entz Burton & Associates is an experience lawyer in estate planning law, business formation and asset protection serving the families in Oklahoma City and Weatherford office.