Most parents work hard for a lifetime to accumulate property and possessions they can leave for the care and protection of their families. Passing down wealth to your children and grandchildren is a generous goal. But many parents ask, Is it better to give my children their inheritance when I die – or now?
The assumption is that an inheritance is a bequest that you leave to your heirs after your death – but there is no “rule” that says you can’t give your kids their inheritance while you are still alive. There are personal and financial reasons considerations in deciding when to give your child their inheritance: now, or after you die.
1. Are You Financially Secure Now?
Do you have the money you need to be comfortable today and in your retirement – and if that retirement lasts 30 years? What will happen to your portfolio if you give your children their inheritance now and you lose your job, or the stock market crashes? Are you financially secure without that money?
2. Are Your Children Emotionally and Financially Responsible?
Not all children become responsible adults at the same age. Do you want to give your child their inheritance today because they’re experiencing financial setbacks, or to see them realize a lifelong dream while you’re alive to enjoy it? Some people become financially responsible at 20, and other adults still are not responsible in their 40s.
3. Is There A Financial Advantage to Giving Your Kids Their Inheritance Now?
There may be very good financial reasons to give your children their inheritance early, such as:
• reduce estate taxes
• reduce their financial burdens such as school debt or helping them invest in a home or business
• funding more shared experiences such as a family trip or a family vacation home
Your legacy is more than the money and possessions you leave your children after your death. Your legacy also includes shared memories and experiences, and that may involve giving your kids their inheritance early – or at least, a part of their inheritance. An experienced estate planning attorney can advise you on the best ways to give your children and grandchildren their inheritance, and the benefits of giving them that inheritance today or in the future.
Carefully reviewing your assets and beneficiaries is an essential part of estate planning. Equally important is carefully reviewing the needs of your children, and your wishes for their future.
If you are planning your estate and have questions about gifting and gift taxes, an experienced estate planning lawyer can advise you throughout the process. To talk to a qualified attorney in Chicago or Lombard, contact the Estate & Probate Legal Group at 630-864-5835.