Andrew Parker

20 Strategies to Ensure Your Children Inherit Your Wealth, Not the State

When it comes to making sure your kids get your assets after you’ve passed away, you’ve got to make sure you plan things smartly. There are plenty of things to do beforehand if you want things to be as hassle-free as possible. Here are 18 things to do so that your kids will actually get your money after you die.

Create a Will

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First things first, you’ve got to get a will written up. This way, everyone knows what you want to be done with your stuff when you’ve gone. No will? Then the state gets to make all the calls, and they might not dish things out the way you wanted them. It’s also a lot cheaper and simpler than letting lawyers figure it out later.

Set Up a Trust

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A trust is where you can put all your hard-earned savings for your beneficiaries to get later. But don’t worry because they won’t be able to get their hands on it until the time’s right, as you’ll set the rules and pick a trusted person to manage. Plus, your kids can avoid the hassle and high costs of probate court.

Protect Your Estate

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Another benefit of setting up a trust is that it can protect your assets from old debts or claims when you pass. Your estate will be able to pay what it needs to and not a penny more, which will keep the majority of your wealth safe for your kids. It’s the best way to preserve your legacy and make sure your assets get used how you want them to.

Joint Ownership

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If you really want to make things simple, you could put anything that’s yours into both your name and your kids’ name. It doesn’t matter if it’s a house or a bank account because making your kids joint owners means it’ll go to them when you pass on. It’s a no-mess and no-fuss method that won’t involve the courts.

Choose Beneficiaries

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Life insurance and retirement accounts allow you to name who gets the cash directly. But make sure you keep these documents updated as your life changes. After all, do you really want your ex inheriting your dollars instead of your children just because of outdated paperwork? Regularly review and update those beneficiaries so your money goes exactly where you want.

Review Insurance Policies

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Speaking of insurance, you should make it a habit to review your policies to make sure they cover everything your family might need. You never know what might happen, and you don’t want to leave your kids in a difficult financial situation. The right insurance can be a safety net to protect them from even the worst kind of surprises.

Give Gifts

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Why wait? You can start handing out bits of your wealth as gifts while you’re still around, as you can give up to $18,000 each year to someone without having to worry about taxes. Doing this ahead of time will reduce your estate planning problems and also allow you to see your kids actually enjoying those benefits now.

Create a Financial Power of Attorney

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Make someone you trust your financial power of attorney so they can step in if you’re ever unable to handle your own finances. They’ll also keep your estate in perfect condition for when it’s time to hand it over. Choosing someone yourself means you’ll have someone who’s actually familiar with your financial wishes, which can help you avoid any potential disputes or confusion.

Use POD and TOD Accounts

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POD and TOD accounts are special bank accounts where you can write down a name, and when you’re gone, this person will get the money directly. You won’t even need to go through probate court. It’s a hassle-free method that’ll spare your loved ones from all that red tape and delays.

Update Your Documents

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Your life’s always changing, so your will and other important papers need to reflect that. Got a new grandkid? Update your will. Divorced? Update it all. If you keep things current now, you’ll be able to avoid any headaches later. Even if there hasn’t been a major life update in a while, you should still routinely review your documents so they’re exactly what you want.

Keep Good Records

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Better yet, you should also keep your financial records tidy so that whoever’s wrapping up your estate can do it efficiently and according to your wishes. Just taking a few hours to keep those records intact will save everyone a lot of time and confusion. After all, don’t you want to make things as straightforward as possible?

Explain Your Plans

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There’s no point in keeping secrets about what happens next, so you should tell your kids what you’re planning and why. Keeping everyone on the same page will help all of you avoid any bad feelings or surprises later down the line. Be open about what you’re planning, and be prepared to justify your decisions.

Protect Your Digital Assets

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If you have any online bank accounts, make sure you’ve included these in your estate planning. You’ll need to tell someone how they’ll be able to access your accounts or at least include some instructions in your estate plans. This way, lawyers will handle all of your assets just the way you want.

Minimize Taxes

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Speak to a tax expert so you can figure out how to keep Uncle Sam’s hands off as much of your money as possible. When you’re smart with your planning, your kids will get more, and the IRS will get less. They received $4.7 trillion in taxes in 2023 alone, so do you really want to add all your savings to this, too?

Choose the Right Executor

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Whoever you choose as an executor needs to be trustworthy and sharp because they’ll need to make sure your estate plans are followed to a T. They’ve got to be able to handle a bit of paperwork and stand their ground if things get sticky. The right executor can make all the difference in making sure your wishes are fulfilled.

Thinking About Special Needs

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If you have a child with special needs, then it’s absolutely essential that you create a special needs trust for them. It’ll help you provide for them without messing up any benefits they might get from government programs. You will have to hire a special needs attorney to create one, and the cost varies between $2,000 and $5,000 from state to state.

Write a Letter of Intent

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Although it’s not legally binding, writing a letter of intent to go with your will can make a huge difference. It spells out your wishes in your own words and makes things easier for your executor. You can even explain why you made some of your decisions so your kids understand things a little better.

Automate Your Gifts

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You could always try setting up automatic transfers or an annuity, which will pay out a certain amount regularly to your children. This way, you’ll give your children ongoing support and help them to budget better from the beyond the grave. Every time that payment hits, they’ll think of you.

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