When you leave your financial assets to your children after you die, it is known as inheritance. As you start a family, you may begin to think about what assets you will want to pass on to your children and what type of inheritance you think would be best. Making plans for your children’s inheritance is a significant part of the Estate Planning process and one you will want to begin considering now.
The reason it is important to plan for inheritance now is that it makes the transfer of your assets after your death much simpler. By planning today and creating the necessary legal documents, you can make certain that after you die, there will be no confusion as to what your final wishes and directives are. Additionally, planning for your inheritance now can give you more control over when your children will receive their inheritance.
When deciding on inheritance matters, the rules that govern how someone gives or receives an inheritance can be complex and can vary by state. Although it is most common for people to leave their beneficiaries their full inheritance amount after their death, this is not the only option available to you. At Trust & Will, a leading online Estate Planning service, you’ll discover all your options for leaving an inheritance to your children while ensuring that you are choosing the optimal distribution timeframe to best fit their circumstances.
Trust & Will has created a list of some inheritance options and will summarize the benefits and drawbacks of each. These options include:
Evaluating Different Times to Receive Inheritance
There are numerous variables to consider when deciding on a timetable for your children’s inheritance. This can make the topic feel more complicated than it needs to be. That is why Trust & Will is going in-depth into each option, clearing up any misconceptions that you may have about the inheritance process.
Upon Your Death
Often, the most common way for children to receive their inheritance is upon your death. In this instance, once you die your children will receive their full inheritance amount. The advantage of this option is that it can make for a simple and easy transition of financial assets, as it will all become one transaction. This is also the preferred method should you decide against giving an early inheritance. This option is also a great choice for people who do not have an exceptionally high net worth.
However, the primary drawback of leaving the entirety of your inheritance to your children after your death, is taxes. If you are someone who has a high net worth, waiting until your death to give away the majority of your financial assets can leave your family members with federal estate taxes they will have to pay. In this instance, it may be beneficial to consider alternative options for inheritance to lower or eliminate the amount of taxes your children may face.
Another important thing to consider when leaving your inheritance to your children is their age. Perhaps you have a child who is “overly enjoying” his freshman year at college, or minor children still in grade school. There are many reasons you may want to thoughtfully consider when and how you would like your assets distributed to your children.
Over time in a Trust
When you decide to leave a financial inheritance to your children in the form of a Trust, you have the option to designate the age at which your children will receive their inheritance. It is even possible for you to state in your Trust that your children will only receive the money after specific life events have taken place, such as after they have graduated college.
Leaving inheritance in a Trust has several benefits. If you were to die at a young age but had a Trust set up in advance, you may have specified that your children would receive their inheritance at a certain age or milestone. If you feel your child is not mature enough to handle a large sum of money at a young age, this is a directive you may want to include in your Trust. Another measurable benefit of leaving your inheritance to your children within a Trust, is so they can bypass probate. This is extremely beneficial because it can save your children months of waiting for court proceedings to take place, and from the expense of having to hire legal representation. A Trust will make the transition of your assets a much simpler and cost-effective process.
While you are still alive
It is also possible for you to leave your inheritance to your children while you are still alive. This may be a good option for you if you have ever wanted to give all or part of your children’s inheritance to them while they are earlier in age. A reason some people may choose this option is that they want to financially assist their children while they are still alive. Some people also may have decided they want to give children all or part of their inheritance after they have reached a certain life milestone, and it is possible they may reach this milestone while you are alive, meaning they may receive their inheritance sooner rather than later.
Deciding how and when to leave your children their inheritance is something you will want to give careful thought to. These decisions are very personal, but it is ultimately your choice to determine the manner in which your assets will be distributed.
In order to afford you ample time and space to make these important decisions, Trust & Will offers comprehensive online Estate Planning. Our online website is easy to navigate and will guide you step-by-step when creating your customized Trust-Based Estate Plan and Will from the comfort of your own home. Visit our website today to see just how easy and affordable online Estate Planning can be!