5 Strategies to Keep Your Heirs From Blowing Their Inheritance

by | Jan 4, 2019 | Estate Planning

A close-up of a legal document titled "Last Will" with a gavel resting on it, partially covering printed text and a signature. A stack of US dollar bills lies beside the document, implying thoughtful inheritance strategies. The gavel, bills, and signature suggest matters of inheritance or testament.

Do you ever wonder whether your loved ones will use their inheritance wisely or squander them away? Well, you’re not alone on this. Most people get concerned that what they’ve worked so hard to build over the years can quickly be squandered by their heirs after they pass on. For your outstanding legacy to last, you must take the responsibility of ensuring that your heirs will not mismanage their inheritance but use them wisely in future.
Here are 5 highly effective strategies to keep your heirs from blowing their inheritance

Take the necessary precautions.

One of the best ways of ensuring that your loved ones don’t blow their inheritance after your demise is by starting to prepare them for inheritance from an early stage. Consider meeting each of the designated beneficiaries independently and then express your desires or expectations concerning spending, charity, and saving. Talk to them about money, investments, taxes, trade-offs budgets, and short/long term goals to make sure they understand everything clearly. Save them from succumbing to financial ignorance by encouraging them to enroll in finance courses or connect them with credible financial advisers to ensure that they make sound financial decisions in future mainly; after you’re gone.

Appoint a trustworthy trustee.

Think of building an incentive trust as a way of encouraging positive behavior in your heirs. While an incentive trust will not necessarily teach them critical finances skills, incentives can be invaluable if done correctly. Ensure that your designated trustee is trustworthy enough to make a fair distribution of wealth as per your guidelines and values without compromise. Leave clear instructions on how and when the wealth you’ll leave behind will be disbursed to each beneficiary to avoid conflicts resentments or lawsuits among siblings. Don’t hesitate to attach some strings within an incentive trust as a way of ensuring that your heirs toe the line.

Get your heirs involved in your values.

Teach your kids how to make wise financial decisions by involving them in your day to day values. Let them tag along to work on a regular basis then teach them a few investment tricks. Discuss the various rewards or challenges affiliated with your line of work. Teach them meaningful lessons on the importance of working hard to build and grow wealth through resilience, wise decision making, commitment, discipline, and diligence.

Be a watchful and willing teacher.

Motivate you heirs by giving them allowances to see what they do with their money. Be on the lookout for financial screw-ups and be ready to give advice where necessary to make them more responsible heirs. Create a practical roadmap that includes teaching them critical financial literacy, saving culture and wealth-building strategies that will keep your heirs from blowing their inheritance. Talking to them on financial literacy and wealth building strategies occasionally is a smart move.

Talk about your WILL.

Most people are reluctant to discuss their wills but gathering the courage to do it can be beneficial to your heirs in the future. Transparency is a necessity as far as your will is concerned. Let everyone understand the whys and whats of your will beforehand for the sake of your family’s legacy. Spell out what each of your beneficiaries should expect according to their responsibilities, personalities and spending habits or plans by putting on your mentor’s cap to guarantee their finances safety. For more information about inheritance strategies, contact Global Investment Strategies today.