We all naturally want what’s best for our children, especially when it comes to financial security. However, it’s important to consider that passing on your wealth through a will may not be enough to ensure it’s passed on in the most responsible way. Many Georgia families are moving to trust funds as a more structured way to protect their children.
A trust can do more than just distribute money to your children, it’s a tool that offers guidance and accountability. As reported by The Fiscal Times, they can be set up with specific conditions that promote responsible behavior. For example, money can be released when a child or beneficiary graduates college or reaches a certain age rather than just distributing the money in a lump sum with no conditions. Another condition may be distributing money in increments. Distributing in increments can discourage reckless spending.
We’ve all heard the term “trust fund kid.” This term continues to carry a negative connotation. Wells Fargo notes that children of wealth parents may lack motivation as they’ve never needed to earn their money or learned to manage it wisely.
To counter the lack of motivation from some children, experts are encouraging parents to take time to teach their children how to acheive financial success on their own. It’s important to teach financial literacy and foster a sense of purpose that will help the next generation to manage inherited wealth wisely.
When done thoughtfully, estate planning can ensure your financial legacy supports your children’s future, not hinders it.
