Whether you’re in the Boomer generation, Gen X or that in-between Generation Jones (people who grew up in the 1960s and 70s, you may have a healthy amount of assets to include in your estate plan. Some may be assets you’ve worked hard for. Some may have been handed down to you by your parents, but you’ve successfully grown or at least maintained them through wise investments.
If you plan to keep the assets in the family by leaving them to your children and grandchildren, you likely hope that they’ll use or invest them wisely so that they never have to worry that a potential economic downturn or a personal crisis will wipe out their savings. You also want them to have the opportunities that this money can give them.
You don’t want to cause them what’s known as “inheritor’s guilt.” This can lead to poor decision-making about the inheritance – including reckless spending. It can also cause some people to stick it in a low-interest savings account and forget about it rather than strategize about how to preserve and grow it.
Key steps to preventing inheritor’s guilt
There are a number of things you can do as you create your estate plan (or even if you already have one) to prevent your loved ones from having inheritor’s guilt but still appreciate and care for their inheritance.
First, transparency is important. Give your loved ones some idea about what they’ll be inheriting so they aren’t shocked when the time comes. It can help to let them know how you hope they’ll use it (for education, to build a business or to pay off mortgages or student loans, for example).
You can do this without putting conditions on the money via trusts. However, if you have concerns that one or more of your beneficiaries may not be prepared to responsibly handle the money – or that it could be taken by creditors – there are specific types of trusts that will help protect these things.
If your heirs don’t have experience handling the kind of assets you’ll be leaving them, it can help to make sure they have a solid team of professionals to help them. You can introduce them to your financial, tax and investment advisors, for example – or at least give them their names so they can contact them for advice.
With sound professional guidance of your own, you can create an estate plan that will help ensure that your loved ones have a solid financial future – without the guilt.