One of the most common financial objectives is to leave money to children, but it is not always a successful endeavour. According to some projections, 70 percent of inherited money evaporates before reaching the third generation, with average losses climbing to a staggering 90 percent by the fourth.
The two major reasons for these disappointing numbers are mismanagement and poor communication. Simply put, younger people have not been prepared to handle managing the inheritance. In many cases, the opinion is that the money was given to them to do with it whatever they want as supposed to protect their parents’ legacy and use the money for future generations.
Halton Wealth Management works with multi-generations of clients and we spend a significant amount of time educating our clients and their children to protect the assets so they can benefit multiple generations. The conversations vary depending on many factors including the age of the children, but we found out that teaching young adults to start investing as soon as they can benefits all involved.
The discussion about personal finances can be unconformable for some, but if you want to protect what you were working for all your life or to honour your parents’ wishes, communication is the key.
Here are some of the topics to discuss when it comes to inheritance:
- How do you feel about money, wealth, what does money mean to you?
- What is the goal for the family wealth?
- What are the family values? How to best handle the inheritance to maintain these values?
- Are there any restrictions, special wishes to be honored?
- What are the specific expectations for use of the money?
- Are you aware of the challenges you might be facing?
Our clients take advantage of our expertise to facilitate the conversation and ensure that the terms of the inheritance are understood by all parties. We take the stress away and in many cases turn an uncomfortable situation into a constructive and beneficial scenario for all.
To start the conversation, request a free no obligation consultation.
