You’re planning to leave an inheritance to your children, grandchildren and other heirs. You want to ensure their financial welfare, but you don’t know how to do it securely or responsibly.
Fortunately, there are some methods you can use to make sure your heirs receive the assets you want them to have. Below are the best ways to leave an inheritance to them.
Put their funds or estate into a trust
Financial advisors often recommend that people place their assets into a trust instead of a will since it helps avoid probate. There are many kinds of trusts that serve various purposes.
Do you have a child, grandchild, niece or nephew who’s irresponsible with money? You can create a spendthrift trust, which allows them to receive funds incrementally instead of as a lump sum. (This method also guards your heir against creditors.)
You may decide to simply use a will
You may opt to use your will to leave assets to your heirs. This typically gives you less of a say in how they use them than if you put the assets in a trust.
You can still talk to your heirs or provide them with letters to tell them how you would like them to use the assets you’re able to leave them. However, these wouldn’t have any legal authority. They could spend any money you left them as they chose.
Give your heirs assets while you’re still alive
You can give your heirs money and other assets and not worry about gift taxes as long as it doesn’t exceed the annual threshold. Moreover, certain situations are exempt from gifting taxes, including charity donations, school tuition and medical care.
Leaving your relatives an inheritance is a great way to provide for them. That said, you have to make sure to do it properly. With estate planning matters, it’s wise to seek experienced legal guidance.