As parents, one of the most significant gifts you can leave your children is not just wealth but the knowledge and wisdom to manage it responsibly. Preparing your adult children for inherited wealth is an essential part of family wealth management, ensuring they are ready to uphold and grow your legacy. This guide will walk you through the steps to prepare your children, fostering responsible behaviour and aligning with your family’s values.
Holistic Estate Planning
John had not updated his estate plan since he got married. When his financial guide raised the issue with him, they discussed not only the tax and asset protection issues but also the holistic benefits of updating his estate plan. John decided to follow a comprehensive process to ensure his children were prepared to inherit his wealth.
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Review Your Estate Plan:
An estate plan is a dynamic document that evolves with your life. Regularly reviewing it with your financial advisor and lawyer ensures it reflects your current wishes. John found that updating his estate plan gave him peace of mind. While you may not need to share every detail with your children, understanding your plan will ease their responsibilities when the time comes. Transparency in family wealth management helps build trust and prepares your children for the future.
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Consider the Impact on Your Children:
Inheritance can affect each heir differently. Some may find it life-changing, while others might not see much impact. Encourage your children to assemble their own team of financial, tax, and legal professionals to help them manage their inheritance effectively. This approach to family wealth management ensures that each child has the support they need to make informed decisions. John discussed with his children how their inheritance would impact them and encouraged them to seek professional advice.
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Promote Responsible Behaviour:
Establishing testamentary trusts with specific conditions can promote responsible use of the inheritance. Even financially savvy children might need guidance in managing complex assets such as businesses or real estate. Discuss how their abilities and goals align with the management of these assets, ensuring they are prepared to handle the responsibilities that come with wealth. John set up testamentary trusts with clear conditions to guide his children in managing their inheritance responsibly.
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Set Realistic Expectations:
It’s crucial to have honest discussions about your wealth and what your children can realistically expect to inherit. This helps avoid unrealistic expectations and ensures your children plan their future based on accurate information. Clear communication is a cornerstone of effective family wealth management. John found that these conversations helped his children understand and align their expectations with reality.
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Shore Up Your Plan:
Identify the strengths and weaknesses in your legacy plan and your children’s financial skills. Use this information to make necessary improvements. Consider protective vehicles for your assets and develop a plan to educate your children about managing these assets responsibly. This proactive approach strengthens your family wealth management strategy. John worked with his financial advisor to shore up his plan, ensuring it was robust and comprehensive.
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Clarify Your Intentions:
Communicate the values and goals behind your estate plan. Explain your intentions clearly to ensure your children understand not just the financial aspects but also the purpose behind your legacy. This can help align their actions with your wishes and promote a sense of respect and responsibility. John found a deep sense of satisfaction knowing that his children understood his intentions and were prepared to continue his legacy.
Legacy Plan
By following this framework, you can ensure that your children are prepared to manage their inheritance responsibly, preserving your legacy and promoting a positive Return on Life for your family. John’s journey through holistic estate planning left him with a sense of fulfilment and confidence in his family’s future. For more detailed guidance, download our ebook, “Why do you need a Real Life Estate Plan,” and take the first step towards effective family wealth management.
General Advice Disclaimer Please note, the information provided herein is general in nature and does not consider your personal circumstances. It is not intended as legal, tax, or personal advice. Always seek personalised financial advice to ensure your estate planning aligns with your unique situation and goals