Those, who have never experienced wealth transfer upon death of a parent may think that it will be a simple process. The reality, however, is that for such a transfer to go smoothly after the parents die, many matters must be taken into consideration and planned for before the transfer occurs. There are steps that the parents, who are passing their wealth to a next generation, can take to make things easier for everyone in the end. There are also steps that can be taked by the children, who are named as beneficiaries, to ensure that the process goes smoothly.
In this post we will focus on what the parents can do to simplify the wealth transfer process.
First, the parents should determine whether their children really need the money. If their offsprings are already doing well financially, it could make better sense to place money in a trust for your grandchildren instead.
If you decide to leave specific assets to your children, sit down and discuss the matter with them. Not all assets’ worth can be truly measured with money. If one child is interested in something that the others are not–such as a home or a family business–to keep it in the family, it could make sense for only one individual to receive it with other assets being distributed to other children. To make sure no one feels that they are getting less than others, an explanation of the plan ahead of time is helpful.
When distributing different assets in kind, taxation of these individual assets on death must be examined. If you are planning on leaving cash to your children, perhaps the best approach to do so, could be via a life insurance policy? Perhaps your children should consider buying an insurance policy on your life?
It is always a good idea to consult a lawyer, who specializes in estate matters and understands different option for distributing assets.