If you have people in your family that habitually spend money to make themselves “feel good” and are not responsible stewards of money, then you might include other language in your legal documents that would incentivize the kids to grow and remain responsible.
Use trusts to protect your assets from creditors, litigation, divorce and from the kids’ potential destructive behaviors. Within trusts, you can dictate (control from the grave) that your kids must meet certain requirements to receive money. Examples include that they must complete a bachelor or masters degree, maintain a modest lifestyle, be gainfully employed, pay bills on time and keep debt to a minimum, marry and whatever other “restrictions” you want to put in place.
An inheritance is not a lottery. It is a lifetime or two of hard work not to be squandered, but to perpetuate responsibility, provision and generosity.
When you are deciding how to plan your estate, keep these key ideas in mind: the importance of learning responsibility with money early, practicing frugality and stewardship often, enjoying the inheritance with your family to build memories, teaching your children well to replicate generosity and stewardship and to give generously to a charitable cause or someone in need.
(Editor’s Note: This article originally appeared on Investopedia.com.)
— By Ted Snow, founding principal, Snow Financial Group