Leaving your children money when you pass away is a deeply personal decision. Many parents want to provide for their children after they are gone. However, it’s not always clear when or how much should be given. It has become more common for financial experts and estate planners to encourage people to reconsider the automatic assumption that children should receive any kind of inheritance. They are beginning to encourage people to ensure their kids have met key milestones before they write them into their inheritance. Here are five essential milestones that you should consider before writing your kids into your inheritance.
1. Financial Independence
Being financially independent is a huge milestone that your child should reach before you give them a large sum of money. You should know that your child can handle their own finances responsibly before they inherit your cash. If they are already consistently relying on you for financial support or struggling with debt, inheriting a lot of money might do more harm than good. Encourage your child to have good personal finance awareness. Talk to them about living within their means, saving, and investing. Then, when it comes time for them to inherit money, they’ll know what to do with it.
2. Homeownership or Long-term Stability
Another key milestone your child should hit before inheriting any money is long-term stability. Specifically, they should have a stable place to live. While they may not buy their own home, having a long-term place of residence demonstrates financial maturity. This requires budgeting, planning for maintenance, and managing their money well. All of this offers up good experience for handling large sums of money. If your child doesn’t have this kind of stability in their life, you risk them spending the money frivolously.
3. Career Advancement
Having a solid career, or at least a plan for one, is another sign that your kid may be ready for an inheritance. When someone has found their footing in their career, they are in a better position to make good decisions about money. It can also be a good indicator that they have enough discipline to manage wealth over the long term.
At the same time, if your child is still trying to pin down what they want to do, receiving an inheritance could dissuade them from finding meaningful work. So, it is important to assess whether or not your child has the focus to continue growing their career before handing them your legacy.
4. Emotional Maturity
Emotional maturity is often overlooked by parents, but it is extremely important when you are trying to determine if your child is ready to handle an inheritance. Being handed a large amount of money can impact relationships, self-esteem, and other general lifestyle choices. For people who lack emotional maturity, it can lead to making impulsive decisions. They might get married suddenly or start spending crazy amounts of money. It’s more than just knowing what to do with the money. You child needs to understand the broader impact of wealth on one’s life.
5. A Philanthropic Mindset
Last but not least, the final milestone you should ensure your child has met is having a philanthropic mindset. This is generally a good indicator that your child will use their inheritance for the greater good. Your child understands the importance of giving back and will have a sense of social responsibility when they receive their inheritance. They won’t view it as personal wealth, but they’ll see it as an opportunity to give back. You can ensure this quality in your child by encouraging them to get involved with charities, volunteer work, or community service. This will help make sure that the money you leave behind will benefit your child as well as the world around them.
Leaving Money to Your Children
Leaving money to your children after you pass away is more than just a financial decision. You need to make sure your child can handle the responsibility of having wealth passed down. Make sure they’ve met each of these five milestones so that you know your legacy will be used wisely. Wealth can be an extremely powerful tool, but you want to make sure it’s in the right hands.