Leaving a Legacy for your Children & Grandchildren

You’ve accumulated substantial assets, and you want to leave a legacy for your children or grandchildren. Before doing so, there are a number of important factors to consider. How much is enough? How old should they be when they receive it? Southwestern Investment Group has listed a few helpful tips below:

Creating a trust

By definition, a trust is a relationship where ownership of assets is transferred to a trustee, which can be an individual or an entity, often a bank. The trustee is obligated to manage the trust assets for the benefit of the beneficiaries, who, in many cases, are children, grandchildren, or other family members of the grantor.   

A will is a legal document that spells out how you want your affairs handled and assets distributed after you die. A trust is a fiduciary arrangement whereby a grantor (also called a trustor) gives a trustee the right to hold and manage assets for the benefit of a specific purpose or person.

Trusts and wills often get confused, so it’s important to understand what each is. A will is a legal document that spells out the details of how you would like your assets distributed after you die. Everyone should have an up-to-date will in place. A trust is a fiduciary arrangement where assets are held and managed for a specific purpose (such as a charity) or person(s). Since you no longer own the assets, trust holdings are not typically subject to probate, which is the legal settling of the estate and can be a lengthy process or considered part of the estate for estate tax purposes. 

Setting provisions?

Once a trust is made, something important to consider is if you should or should not be setting provisions. Obviously, you can’t control what the beneficiary does with the money you leave them, but you can determine at what age they can gain access to it. In many states, your beneficiary is not eligible to access a trust until they are 18.

Some other options are setting the age you feel comfortable with, or if it’s specifically for grandchildren, giving control of the trust to their parents or guardian until they feel they are of age to responsibly use it. This way you can help ensure that the inheritance is used appropriately and at appropriate times in their adult lives. Trusts are state regulated, so you should check the regulations of the state in which you live.

Talk with your financial advisor

If you haven’t already, schedule an appointment with your financial advisor at Southwestern Investment Group to go over your current plan. It is an important exercise to break down your current level of financial confidence. Once you do that, you can determine a measuring stick of where you need to be to live a comfortable life and leave wealth as a part of your legacy.

While planning for what happens with your assets after your death can be a difficult concept to think about, a trusted financial advisor can help you navigate uncertain waters with confidence. Southwestern Investment Group takes an informative, educational approach to financial advising.

We know that if we arm our clients with enough information about their financial options, they will be able to determine the financial choices that are right for them. If you’re facing life changes in the next few months, make an appointment to meet with a financial advisor at Southwestern Investment Group today.

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