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Inheritance Planning: 5 Questions to Ask Before Leaving Money to Your Kids

As a parent, you want the absolute best for your children (and further descendants!), so it is normal to worry how the wealth you pass down will impact them long-term. Every family has different views and ideas when it comes to passing down the family wealth as a legacy for their children. There are many questions to ask when deciding exactly how much that inheritance should be, and the reality is that the “right” answer will be different for everyone.

With these questions come important decisions that need to be made with inheritance planning; here are a few of the things you may be grappling with:

How much money should I give my children?

Determining how much money to pass down is one of the most important decisions wealthy families will make. When it comes to deciding how much to pass down to his children, billionaire Warren Buffet is quoted as saying, “enough money so that they would feel they could do anything, but not so much that they could do nothing.” Most parents’ objective is to find a modest amount to leave their children to ensure a comfortable future, but not leave too much, or give it at the wrong time. The bottom line, is every family is unique and needs to figure out the right balance that works for them.

A few things that may help your family determine this are:

– Current lifestyle and cost to maintain it:

With first generation wealth, there is typically a strong connection to the value of the funds and a deep appreciation for making it; they did not grow up affluent and can recall living a modest childhood. They likely came out of school with debt and eventually made their own wealth. For the next generation, they have generally grown up with a different lifestyle – a nicer home and vacations, possibly private school, and often no college debt to worry about. Accordingly, if the desire for the family is to maintain the same lifestyle for the next generation rather than going backwards, you can back into the size of an endowment that would be needed to support those means.

– How lifestyle may change and what areas you want to support:

For some families, this is ensuring there is enough inheritance given to cover the cost of healthcare and education for multiple generations. For other families, there can also be a focus on endowing the costs of personal real estate, whether that is to ensure each child can afford and support a certain size home, or if there is a favorite vacation home that continues to be funded.

Overall, it may be said that thinking through the goals for the next generation will help determine how much to leave.

When should my children get their inheritance?

Parents are also posed with the tough choice on when to pass on their assets to their children.
Some choose to give the money while they are still around to enjoy watching the benefits that the money brings. When parents distribute inheritance wisely and in small portions over time, their wealth can enrich the lives of their children and allow for long-term financial security. Early adulthood is often when people need the most financial help as they are beginning a career, trying to buy property, and starting a family of their own. This may be a good time to start supporting these goals, affording them the ability to do something meaningful, such as purchase a home, become mortgage free, pay off student debt, or start their own business.

Should I set restrictions on the inheritance?

For parents wanting to make sure that their children use their inherited wealth wisely and make the “right” choices, we often suggest putting the money in a trust. A properly constructed trust will facilitate asset protection, but can still be set up in a way to be supportive, rather than restrictive for beneficiaries. A couple of strategies that can help ensure trusts are beneficial are to think through the trustee succession powers (including who has the right to remove and appoint) and also to educate and engage your children on the purpose of a trust in order to increase their understanding and reduce any resentment or misunderstanding. Starting to educate the next generation about trusts early will help them become strong stewards of family wealth, hopefully, for multiple generations.

Should I be “fair” and leave my children equal shares?

Deciding whether to leave equal shares to each child is challenging and complicated. Certainly, there is not a clear-cut rule, but the question can be troubling for many. First, you may consider defining what “fair” is to you. Is it merely a dollar amount, or is it your wish to leave more to beneficiaries with a greater need? It is important to remember that it is your money and your right to choose how your wealth will be divided. Having your wealth remain in a trust can include some discretion for trustees to decide in the future about which beneficiaries may need more support. This can be helpful in case there are any special needs beneficiaries, or in the event that your children choose different career options with different income levels.

Do I want to leave my money to something other than my children?

It is possible to leave money to both your children and to a charity that means something to you. You can even create a family charity foundation, allowing plenty of opportunities to teach children and young adults about giving back and developing real world skills in leadership, investment management, negotiation, social perception, and teamwork. Involving children in a cause that it is important to your family and allowing them to help make decisions is one way to ensure that your family’s philanthropic legacy remains. If this private foundation is established to be handed down from one generation to the next, your foundation can produce multiple generations of individuals who are committed to the same ideals. If you want your children to learn financial values, charity is a great place to start.


You have worked hard to build your estate and preserve it over many years, but eventually, it will be time to leave it to your descendants (and/or charity). So, dedicate the effort to make sure that the next generation is prepared; it is your responsibility to educate them on money management, as well as on core values, and what is important to your family and your legacy. Having an open dialogue and making them aware of your family’s wealth, and their responsibilities relating to it, will set them up with the best opportunity for success in the future.

For more information on teaching your kids about money, you may want to read our article, The Greatest Gift Wealthy Parents Can Give Their Children. If you are seeking help managing your estate and would like to talk with one of our experienced advisors, please don’t hesitate to contact us!

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