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Estate Planning Best Practices

Over the next several decades, the biggest and wealthiest generation in U.S. history will transfer roughly $30 trillion in assets to their Gen X and millennial children. What is the best way to pass down wealth to the next generation? When one dies with considerable assets, they have several options for places to leave their money, including to loved ones or a charity. Here are some best practices to consider when planning your estate.

Protecting Your Assets

If you have people in your family that habitually spend money to make themselves “feel good" and are not responsible stewards of money, then you might include other language in your legal documents that would incentivize the kids to grow and remain responsible.

Use trusts to protect your assets from creditors, litigation, divorce and from the kids’ potential destructive behaviors. Within trusts, you can dictate (control from the grave) that your kids must meet certain requirements to receive money. Examples include that they must complete a bachelor or masters degree, maintain a modest lifestyle, be gainfully employed, pay bills on time and keep debt to a minimum, marry and whatever other “restrictions” you want to put in place.

An inheritance is not a lottery. It is a lifetime or two of hard work not to be squandered, but to perpetuate responsibility, provision and generosity.

Best Practices for Heirs

Materialism is a big problem in the U.S. The idea of "keeping up with the Joneses" or the idea that one must have the newest of everything in order to be happy can be easily observed in the media and maybe even in your personal life. Many people think more about increasing their standard of living once an inheritance is received.

Do not be tempted to go wild with new things. Instead taking a family vacation and building memories is fine to do for your family. You were blessed with this money, you didn’t earn it. Be a blessing to others with it too.

A sense of entitlement can sometimes manifest itself in this attitude: “I don’t have to apply myself since I know I’m going to receive an inheritance." Responsibility goes out the window, diligent work is shunned, apathy sets in. Remember, your parents and/or grandparents did all the work for you to even get any of this so treat it as if the only way you could receive it is that it comes with a stewardship/fiduciary responsibility attached and that it isn’t even yours. Continue to work hard but enjoy some of it from time to time. Your children will be watching you.

Giving to Charity

Impressing upon the next generation that it is good to give to organizations that are purposeful is important. It could be environmental, humanitarian, disaster relief, animal, other philanthropic organizations, or it could be to help fund the endeavors of local churches. It could also be helping a struggling family in the house next door. These are all important causes to give money.

In addition to giving, we teach our next generation the importance of giving because, not only do we need to look after our own needs but the needs of our neighbors and others in extreme poverty. This helps us, as people, develop empathy and sympathy for others that are truly in need.

Let your children see you give and remind them why and how much you are giving. Also, give your time serving as well so they can put real faces on the action of giving money. Not that we are expecting anything in return. We get so much back from giving - soul level gratitude, character, a sense of sacrifice and purpose. These reasons far surpass the added benefit of a tax deduction for giving.

Giving to Loved Ones and Family

Giving to people rather than organizations can get sticky because of family dynamics. It can be complicated to choose who to designate for a bequest or inheritance. There are a few things that you can do to protect your assets and reduce the amount of conflict that can arise over how your assets are distributed.

Teach your kids the value of money and not to love the money but love the noble things we can do with it like taking care of family, taking care of needs around us, making good financial choices and decisions, etc.

It is alright to treat your children differently when it comes to your estate plan. They don’t all need to be treated equally. However, there is an equitable position to take in who gets what and how much. Maybe your daughter is a radiologist that is paid six or seven figures, while your son is a high school teacher that is responsible but doesn’t earn a high salary. He may experience more trouble building his retirement and taking care of his family. Your daughter doesn’t need to be treated equally because she will probably be quite wealthy, while your son will probably need more help. Giving him more of the inheritance is based on an equitable measure. (For more, see: 5 Ways to Mess Up Estate Planning.)

When you are deciding how to plan your estate, keep these key ideas in mind: the importance of learning responsibility with money early, practicing frugality and stewardship often, enjoying the inheritance with your family to build memories, teaching your children well to replicate generosity and stewardship and to give generously to a charitable cause or someone in need.


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