The Informed Investor

When our clients begin to think about inheritance planning, most are under the assumption that the assets they leave to the next generation will improve their lives. Unfortunately, this isn’t always the case—sometimes, an inheritance can have a detrimental impact on beneficiaries’ lives. This is most likely to happen when beneficiaries aren’t adequately prepared for handling their inheritances. Here are some steps you can consider in the inheritance planning process to prepare the next generation.

Stewardship vs. Entitlement

It’s important to instill a sense of stewardship in beneficiaries, rather than entitlement. No one is entitled to an inheritance, not even from their parents. The assets adult children and grandchildren inherit aren’t their birthright; instead, they should see themselves as stewards of this wealth, with the responsibility to use it in such a way that it has long-lasting benefits and, ideally, grows in value so it can be passed onto future generations.

To prepare heirs to be good stewards, transparency is key. We advocate holding regular meetings with you and your children—either virtually or in our office—to make sure all parties understand the value, impact and responsibilities of their inheritances. Inheritance planning isn’t just about making sure your estate is in order, but it is also about empowering your heirs with the skills and knowledge needed to wisely manage their inherited wealth.

Consider Your Business

Another aspect of inheritance planning that may be overlooked is planning succession for owning and/or operating a family business. Don’t assume adult children will want to take over your business—ask them. Be sure they understand the responsibilities, training, commitment and obligations involved, in addition to the benefits. If you have multiple children involved in a family business, make sure there is no confusion about how ownership and leadership will be decided. This can be a contentious issue in many families and ironing out a business succession plan while you are still around can curtail any discord once you’ve passed away or are no longer able to run your business.

Help Your Heirs Get the Guidance They Need

Managing a substantial inheritance requires support from financial advisors, accountants, and attorneys. You can ensure a seamless transition of wealth from one generation to the next by helping them assemble a team of experts who have worked with you and understand the priorities for your heirs.

At ICC, our inheritance planning services can include meeting with your heirs and assisting you in familiarizing them with financial management. During family meetings, they will learn how asset allocation, risk management and prudent judgment and guidance are required to sustain and grow wealth.

Inheritance Oversight

If you have concerns about how your adult children will handle their inheritance, you may wish to give them a portion of their inheritance now, so you can see how they use it and plan accordingly. This also allows you the opportunity to mentor them with making their own investments, setting up a business, or making decisions on how to pay down any existing debts. On the other hand, you don’t want to give your heirs so much of their inheritance that they’re unmotivated to establish their own careers and build their own wealth. Our financial advisors can help them with these choices.

Learn More About Inheritance Planning

If you would like to learn more about inheritance planning and have $1 million or more in investable assets, our fiduciary financial advisors are here to help you now. ICC provides clear, unbiased investment management services and inheritance planning for its clients, backed by a team of experienced fiduciary, financial professionals. Contact us today at 702-871-8510 to learn how our team can help you.

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