Usually, family members receive an inheritance after someone dies. Some people begin thinking about their legacy as soon as they begin a family - it really is a perfect time to start. It is never too early to start thinking about the future. Consider what assets you want to leave your children and what kind of inheritance you believe is best. Making plans for your children's inheritance is a critical component of estate planning.
If you make plans for their inheritance now, you are making the transfer of your assets easier for when the time comes. By planning ahead of time and preparing the necessary legal documents, you leave no doubts about your final wishes and directives, plus there will be little room for arguments later. If you plan, you have more control over when and how your children will receive their inheritance.
The rules governing how someone gives or receives an inheritance can be confusing and differ from state to state. Although it is common for people to leave a beneficiary (or multiple beneficiaries) their entire estate after death, this is not your only option. You want to learn about your choices for leaving an inheritance to your children or other family members, as well as selecting the best time for them to receive it.
Different Times to Receive Inheritance
When choosing a time to give your children their inheritance, there are several factors to consider. The time that they can receive it is up to you, but the processes may appear to be more complicated than they actually are. Because of this, you should understand how the inheritance process works before making a final decision.
Upon Your Death
If you nominate them in your Will, your children can inherit the whole sum of your estate when you pass away. This approach has the benefit of being a quick and simple transfer of tangible and financial assets. If your net worth is not a considerable amount, this alternative is an excellent one.
Taxes, however, are the main disadvantage of giving your children their entire estate when you pass away. With this approach, your heirs will need to pay estate taxes, which could be a considerable amount if you have a high net worth. If that’s the case, it may be advantageous to think about other inheritance choices so that you can reduce or remove the potential tax burden it would place on your children.
Over Time in a Trust
Consider allowing them to get their inheritance at a specified age or milestone. You have the choice to specify at what age your children will receive their inheritance should you leave them a financial legacy in the form of a trust. By placing the estate in a trust, your children can avoid probate.
This idea may be best if you believe your children are not mature enough to handle a significant quantity of money. In your online Will, you can nominate a Trustee. The Trustee holds onto the inheritance until your child reaches the specified age. Even if they don’t receive their entire inheritance immediately, your child can still benefit from it because the trustee can legally pay for their expenses.
You might also stipulate in your will that your children will not get the money until after a singular life event, like after earning a university degree. It is a little mischievous, but this approach will dispel any ideas of them quitting university without graduating.
If you think your children will achieve the desired landmark while you are still living, they can inherit their legacy sooner rather than later, even if it is just part of their inheritance.
While You are Still Alive
You may make your children happy if you give them all or a portion of their inheritance before you pass. This way you can see them enjoy it. If you wish to provide your children financial support while still living, this can be an excellent choice for everyone involved.
Due to a young child or young adult not having the experience or maturity to manage a large sum or the probate process, it’s likely they will need to rely on a trusted adult to guide them. For this reason, the person or organisation you choose as trustee to administer the money is crucial. It can spare your kids from having to pay for legal counsel and from having to wait long months for court procedures. With the help of a trust, they can transfer assets with ease and affordably.
There are many reasons to carefully examine when and how you would like to disperse your assets to your children. One reason is to keep the peace. Close families can sometimes fall apart because they want all the money or assets belonging to a loved one. Inheritance should be about removing generations of debt and setting ourselves up for success. Done the right way, we can eventually eliminate poverty. For these reasons alone, give great regard to how and when to leave your children the family legacy and inheritance.
The first step in leaving an inheritance is to ensure you have a legal Will in place. With Willed you can write your Will online in less then 15 minutes. Get started at willed.com.au.