How Much Should I Leave the Kids? A Guide for the Gifting Process
When it’s time to consider passing along wealth to your children – and future generations – two key questions arise:
- How much can you leave the kids?
- How much should you leave the kids?
A helpful first step may be to meet with your financial planner. They can help assess your situation, goals, and intentions, then advise on the most tax-efficient and strategic way to pass along your assets.
To answer the “How much can you leave?” question, it’s important to first understand what your needs are to ensure you’ve provided for yourself. This would include your expected living expenses along with a buffer for investment return fluctuations, unexpected health events, or living longer than anticipated. Solving this equation is something your wealth manager can advise on as part of the financial planning process.
Once your future security is planned for, you can address the second, more personal question of “how much should you leave?” Depending upon your plan, some gifts to the family may be made during your lifetime. Consider targeting gift amounts for specific events or needs (i.e., a down-payment for a home, education, annual family trips, etc.). Lifetime gifting can be a rewarding experience as you’re able to see the enjoyment and impact your gifts have on loved ones. It can also be an opportunity for the recipients to learn valuable lessons in handling smaller amounts of money, and help them prepare for potentially larger amounts later in life.
Upon death, there is no one-size-fits-all formula for how much to leave children. Some parents want their children to earn their own way and end up leaving most or all assets to charity. Others can’t imagine their children not getting every penny. In either case, any directives should be clearly spelled out in your estate documents.
These discussions surrounding money are an important piece of the overall family wealth picture, and many people just aren’t sure where to start. At Richard P. Slaughter Associates, we offer unique value to our clients by helping facilitate family conversations surrounding wealth. We’re honored to bring families together and navigate these topics, as we know how important it is to one’s overall well-being. Above all, we take a holistic approach to families – not just our clients – and the legacy they want to leave.