Leaving an inheritance to someone is a big responsibility for you and the individual you are leaving it too. Before you finalize where your inheritance is going, you may want to ask some questions to establish if the person you are considering can handle the responsibility of an inheritance. Consider using these tactics to ensure that whoever may be receiving your inheritance will use it responsibly.
Many people who have children will leave their inheritance to them. Give your children a financial test to see where they stand when it comes to handling money. If you are planning on giving your children a large portion of money in your inheritance than test out the waters and see what they do with a much smaller amount of money. This kind of test can give you insight into what kind of habits and choices your kids will make when given the opportunity to have a large amount of money. Hopefully, with the new information, you can better formulate your options for who will be getting your inheritance.
A good way to decipher who will be receiving your inheritance money and how much is to add incentives. Incentives can vary depending on the policies you want to implement. A common incentive example is an educational incentive. An educational example could be based upon what level of education your children or beneficiary receives and pay out accordingly. You can set the amount of the incentive and also the degree of education required to receive that incentive. An income incentive is another common incentive that can be put in place with an inheritance. Guidelines could include matching the amount of money that your children will make to how much inheritance money they will receive each year. These kinds of incentives will continue to push your beneficiaries to work for the money in the inheritance rather than just receive it all at once.
Distributions to Ages or Events
Another possibility to divide your inheritance money over a period is to create events or ages that your beneficiaries will receive portions of the inheritance when they reach that certain point. An example would be if the beneficiary is twenty years old and receives an inordinate amount of money and do not know what to do with it. Instead, you can set up limitations where your beneficiaries will not receive a certain portion of the inheritance before they are thirty years old, or forty. Other restrictions could be receiving the inheritance when they are married or graduate from college among other things.