For those who have children, the urge to protect and provide for them never ends. Even as they grow into adults and start building their own lives, we still want to ensure they never go without the things they want and need in life. However, when it comes to estate planning, is it wise to give your children everything you own as an inheritance?
Warren Buffet once stated that he would give 99% of his wealth to charity within his life or after his death. While this still leaves plenty for his children to inherit, including homes and investments, it serves as a practical example that you don’t always have to give everything to your children after death. You may even help them better by setting an example of generating your own wealth while leaving a legacy of generosity to those around you. However, the decision is ultimately up to you and your family on how inheritance will be distributed after your passing.
Teaching Smart Spending Habits Early
If you want to share your wealth with both children and charity in your life and after death, it’s essential to teach your children the value of the dollar early on. By investing in their careers through college savings and extracurricular programs for their talents, you can ensure they don’t need your wealth to succeed as adults. In addition, by limiting your children’s inheritance, you can also motivate them to become as successful as you were in order to continue your family’s legacy.
When determining how much to give in your inheritance, you must balance your wants for your children with your retirement needs. You will want to plan for your spouse’s retirement needs as well, including travel expenses and plans you’ve always wanted to do together.
To determine the amount of inheritance you will leave, talk with your family to decide whether a lump sum, percentage of wealth, specific assets, or gifts such as a college fund for grandchildren will be suitable for your unique situation. You may opt to give your children money but gifts such as a home or ownership of the family business to improve their financial security over time.
Are you confident that your children and grandchildren are ready to inherit, manage, and grow their inheritance? 95% say no. Our 3 step process provides families with the Clarity, Alignment, and Communication needed to effectively prepare the next generations. Contact us to learn more.
Determining Charitable Giving
If you are passionate about a particular cause or simply want to leave a legacy after passing, giving a part of your wealth to charity is a great option. Many families decide to give a certain percentage of their remaining wealth after death to charitable causes or establish a memorial foundation to keep a person’s legacy living for decades to come. Like leaving your inheritance, the amount and type of charitable giving is a personal decision that should be discussed with your family and financial advisor.
How To Give To Charity
If you’ve determined you want to give some of your wealth to charity, it is essential to talk to your financial advisor and determine how much and in what way you want to share. Most families use one of the four methods below to add charitable giving to their inheritance:
- A charitable bequest
- Name a charity as a beneficiary in your will
- Establish a charitable foundation through The National Christian Foundation
- Using a charitable trust
Honoring Your Wishes
Ensure your wishes are honored after your passing by working with a financial advisor and legal counsel to establish a will and trust or foundation if you plan to leave a significant amount to charity. This ensures that your wishes for both your children and financial legacy are honored, and your family does not have to decide for themselves what to do with your assets.
The first step to building greater wealth for your legacy after passing is working with a financial advisor to prepare for the future. To learn more about your option for building wealth and estate planning for the future, contact OneAscent today.