Protecting Your Children From Themselves

two hands hovering over silhouette cutouts of children against green grass background

Families often grapple with how to hand down their assets to their kids without them turning into a total mess. As we roll towards the biggest transfer of family riches ever, it’s crucial to make sure the next generation can handle it.

There’s a bunch of issues at play, like:

  1. Money Smarts Gap: If the heirs don’t get the info on money matters, they might blow through it or make terrible investments.
  2. Entitlement Drama: When the family hands down wealth, it can make the kids feel like they’re owed everything, killing any motivation to hustle toward their goals.
  3. Shady Influencers: Loads of cash can attract sketchy people looking to take advantage, possibly leaving your heirs broke.
  4. Family Feuds: Arguments over who gets what or how to run the family money show can turn siblings into rivals.
  5. Tax and Legal Headaches: If your estate plan is a mess, you could be leaving your heirs with a pile of legal and tax drama, ruining the inheritance.

But fear not! There are ways to dodge these issues. Check out these essential moves to make sure you and your heirs are on solid ground. As you go through them, figure out if you’ve checked all the boxes or if there’s still work to do.

Get the Knowledge Flowing: Start by giving your kids knowledge about finances. Push them to get savvy about budgeting, investing, and saving. Maybe even chat with them about the family’s money goals.

Trust in Trusts: Setting up a trust is like superhero-level protection for your kids’ inheritance. You get to call the shots on who gets what set some access rules, and appoint someone to manage things for your kids.

Easy Does It with the Money Handoff: Instead of dropping the entire family fortune on your kids at once, go for a slow and steady approach. Hand out cash over time to help them get used to managing the newfound wealth and avoid any impulse buying disasters.

Spread the Do-Gooder Vibes: Teach your kids a sense of duty by involving them in charity. Creating a family foundation or a fund for giving back is a way to show them the ropes.

Bring in the Pros: Get some financial and legal advisors on your team. They can help you plan things out to dodge crazy taxes and legal messes.

Talk It Out: Openness with the family is key. Regular discussions about money, estate plans, and expectations can stop future blowups and misunderstandings.

Keep Your Plan in Check: Give your estate plan a regular once-over to make sure it’s up to date with your wishes and current money goals. Changes in laws or family dynamics might mean you need to tweak things.

Remember, it’s not about keeping your kids away from the family inheritance but making sure they’re ready to handle it like champs. Stick to these moves, and you’ll be setting up a solid legacy for your heirs and giving your kids the skills, they need to navigate wealth.

Sources:

  1. Lieber, Ron. “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money.” HarperCollins, 2015.
  2. The American Bar Association. “Family Trusts Guide.” 

OneAscent Financial Services, LLC (“OAFS”), d/b/a Provident Oak Financial, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.