You’ve worked hard to acquire your assets, and now that you’re getting older, you’re considering talking to a New York estate planning attorney. You want to pass down an inheritance to children and grandchildren, and while that’s a noble act, it’s easier said than done.
Many people leave inheritances to family members but rarely do they last. Inherited wealth may sound like a good thing, especially for a family member who is struggling financially, but it comes with its downsides.
When a person comes into a large sum of money, they may spend it immediately instead of saving for the future. Your child or grandchild may not be motivated to work. Even if your family members are financially savvy, they could still lose a significant amount of money should they ever get married and divorced.
The goal is to have it both ways—give family members enough money, but not so much that they are not financially independent. There are some ways to help you communicate with your family members so they can hold onto their inheritance and even pass it down to other family members when they pass away.
Teach Money Skills Early On
Many marriages break up over finances. Typically, this is because one person is a spender, while the other is a saver. Savers tend to have good money management skills, while spenders were never taught the importance of saving up for the future.
Don’t be afraid to talk about money. As a parent and grandparent, you can teach younger generations the foundations of money management. Budgeting and delayed gratification are helpful tools that will serve your children through life. Good money skills teach children to make decisions and prioritize.
It’s important to teach your children that if they do get married, they need to keep their inheritance in a separate account in their name only. Once they put that money in a joint account or use it to pay for marital expenses, it becomes the spouse’s property as well.
Set Up a New York Trust Inheritance
When assets are owned by a trust, it’s harder for a child’s ex-spouse to pursue these assets in a divorce because the child does not own the money outright. For the most part, assets in a trust are considered separate, not marital, property, which means they cannot be divided in a divorce.
Have Your Child Consider a Prenuptial Agreement
A prenuptial agreement can protect assets acquired before the marriage, as long as your child discloses the inheritance to his or her future spouse before marriage. It keeps assets acquired in an inheritance as non-marital property so that it cannot be split in a divorce.
Work with an Estate Planning Lawyer in Brooklyn
Estate planning is no easy task, especially when your goal is to keep your hard-earned money in the family for multiple generations. Seek guidance from Brooklyn estate planning lawyer Theodore Alatsas ESQ to learn more about the inheritance rights of children. He can help preserve your assets for future generations. Contact our office at (718) 233-2903 for a free consultation.