How should I talk to my kids about an inheritance?

Explore the often-overlooked importance of preparing your children to be responsible stewards of their inheritance. Learn how involving them in financial planning conversations now can prevent the mishandling of assets later, and how Peak Financial Management assists families in navigating these crucial discussions for a lasting legacy.

Clients with children often consider the needs of their family and heirs when setting up their financial plan. But all too often, these same clients rarely involve their children in the plan or equip them to be good financial stewards of such an inheritance. This approach leaves many heirs struggling to make sense of new wealth, regardless of the relative size of the inheritance.

A recent study from The Ohio State University found that one out of every three people who receive an inheritance spend the money within two years(cite/link). And for individuals who inherit money in the second generation, it almost never lasts to the third generation, according to Nick Wolverton, CFP.

“When you don’t have to work for wealth, there’s less motivation to preserve that wealth,” Nick explains. “Found money never tends to last, nor the understanding of how to make it last.”

You’ve spent a lifetime saving for the future, caring for your home, or building a business. The last thing you want is to leave an inheritance to your children and family who may not be ready for the responsibility of wealth.

Consider these questions as you think about what you’ll leave behind to your children:

  • How much money would do good?
  • How much money might actually be harmful?
  • For families with multiple children: are their needs evenly distributed, or are some better financially equipped for the future than others?
  • What does “fairness” look like when distributing your assets?

In addition to working with clients on their comprehensive financial plans, Peak Financial Management also works with families in preparing and talking with their children about family values, goals, tax implications, and asset management. More often than not, your children will need just as much professional help navigating finances and inheritance as you needed to structure it in the first place.

Don’t wait until your kids read through your will to share your long-term financial goals. We encourage clients to include heirs in financial conversations today. We facilitate family meetings to foster dialogue that prepares your heirs to continue the legacy you’ve worked so hard to build.

Contact us to learn more about family finances, estate planning, and inheritance considerations.

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