An inheritance is traditionally a gift transferred to a child or grandchild after a person died. You don’t necessarily have to wait until you have passed to share some of your estate with your loved ones, however. Even if you ultimately decide not to give your kids their inheritance while you are still alive, it’s a good idea to discuss the contents of your will before you pass on.
Discuss your Plans for your Estate in Advance
Being open about how your estate will be divided in advance will avoid fighting among your survivors and hurt feelings after you have passed. The final decisions about how your money and property are to be divided on your death is yours, but you can still ask your children about any preferences they may have about certain items that you own, such as a cottage, jewelry, or even small personal items.
Some family members may have strong feelings about wanting a particular item, while others may not be interested in that piece at all. You won’t know how someone feels about family property unless you ask, and the answers you get may end up surprising you.
If you Decide to Give your Kids Their Inheritance While you are Still Alive
Once you have decided to give a gift, the next question to consider is when to give the money. By the time your child is in his or her mid-40s, he or she is probably mature enough to handle receiving a partial inheritance.
Keep in mind that if you choose to hand over a gift, your child can choose to do what he or she wishes with the money. The choices your child makes about what to do with the money may not be the same what you would do with the same kind of gift, and you need to be prepared to step back and let them do what they want with it.
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How Much Should you Give a Child or Grandchild
The amount you choose to give a child or a grandchild is entirely up to you. Some people like to contribute to a grandchild’s education by making contributions to a Registered Education Savings Plan (RESP) so that the grandchild can benefit while they are still alive.
You could also choose to give your child or grandchild a lump sum as a gift while you are alive. You will want to make sure you don’t jeopardize your retirement savings as a result; make sure whatever you give doesn’t interfere with your cash flow.
Child or Grandchild’s Expectation of More
Another issue you may run into with giving an inheritance early is the expectation that there will be more money coming in the future. If your decision is that you will be making only one gift during your lifetime, make your wishes clear to your family and stick to it. You may have to get used to listening to your children telling you about difficult times they are going through without jumping in to take action to “solve” the problem, even though it’s hard not to try to fix the situation. .