Educate Your Heirs
One of the best gifts you can leave your heirs is education about money in general and your financial affairs specifically. This can include passing along your ethics and values.
You may have become knowledgeable about finance, investments, income taxes and estate planning because you have been successful and have had years of experience. For someone who doesn’t handle these things, all of this can seem like a big black hole.
There are reasons you may choose to handle all the financial issues on your own. Maybe you understand and like dealing with the family finances, or you feel you are doing your spouse and children a favor, or you are protecting your heirs and you want to keep tight control.
But it can be cruel to not teach your spouse and children about finances. As adults, we all need to be competent in handling finances. We won’t always have someone else around to take care of this for us. And if you are no longer around or capable of managing everything, your heirs will need to know what to do.
Your children may be young or haven’t yet gotten past living paycheck-to-paycheck. They could be raising a family, paying a mortgage and investing in a business of their own. These are good reasons to learn important financial lessons, and you want them to understand the meaning of money in their own lives.
Passing on a legacy of sound wealth management has many virtues. It could prevent your heirs from making many mistakes due to lack of knowledge. It may help ensure your estate lasts for many generations. It will also give you confidence that your family is equipped to handle things when the time comes.
You may have concerns about leaving your children and grandchildren with large sums of money or other assets. These concerns can be addressed with proper estate planning and by tackling issues directly with your heirs.
I’ve found the best way to educate children is to start from a very early age. Involve them in age-appropriate discussions and allow them to make their own mistakes and develop good money habits.
Doing everything for a spouse and keeping them in the dark is a real disservice. One day your spouse may need to pay all the bills, take care of the house and car and take care of you. Ensuring your spouse has the know-how and confidence that they need is an act of love.
Family meetings can be a great way to introduce your heirs to your finances. You can bring in your other advisers, such as investment advisers, CPAs, insurance agents and estate attorneys. The goal is for your heirs to know your team of advisers and for this team to know your family. Your heirs will understand who to call when and if they need help.
If you have a family business, it is critical to get everyone involved in how to run the business. Find out early which children and/or grandchildren may be interested in taking over the business and which ones will be capable. You may find that none of your family is interested. Knowing this early will allow you time to figure out how to sell the company or transition it to other qualified employees. Good succession planning and training on all aspects of running a business will help with a smooth transition when the time comes for you to exit.
Leave your heirs a legacy of knowledge and financial confidence. Your family will appreciate this more than you can know.
This commentary originally appeared February 2 on TheCasperStarTribune.com
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