Some with large estates worry that a large inheritance can hurt rather than help loved ones. People have different attitudes about money: should it be saved, spent or used for a purpose, such as supporting a non-profit or cause? With this in mind, parents can take steps to prepare adult children for an upcoming inheritance. This can be nearly as important as the actual estate plan.
Tips to foster their success
Some families do not like to talk about money or wealth, which can mean uncomfortable conversations for parents and children. It is a necessary conversation, however, particularly if the plan involves a large inheritance.
Tell them what to expect: One challenging scenario would be giving the children substantially less than expected. By giving them a rough approximation of their inheritance, they can plan accordingly, including becoming more conservative in investments or other long-term financial goals. It may even help them plan on how to pay for college tuition.
Explain your thinking: Perhaps a vast majority is designated for charities, foundations or a church. They may not like this decision, but they should hear it from you instead of reading the will.
Give them helpful information: Knowledge regarding the nuts and bolts operation of the estate is also beneficial. This can mean explaining how you designed the trust, or how the estate will be handled and by whom. It may be useful to give them an overview of any tax obligation or how to address financial obligations. If there is a significant shift, it is also wise to inform those affected by this loss or windfall.
Foster their goals: It may also make sense to encourage them to pursue their professional or business goals. This can be done with a small amount of seed money or a partnership. Starting or running a business before they inherit additional assets can provide a strong foundation for managing a large estate as a steward instead of a recipient.
Good, bad or not at all
There is no guarantee how the large estate will impact them until it happens. Ideally, it will be positive or maybe not at all, so some conversation about the matter and careful planning will likely have a positive impact. Parents with questions or concerns can check with their estate law attorney. These legal professionals have a lot of firsthand experience regarding what works best and identifying avoidable problems.