It can be difficult to know how best to preserve your wealth for your children. You’ve worked hard for your money and you should be able to distribute it the way you want. You can use tax-advantaged accounts, invest in real estate, or set up a trust. Each of these things is a great option for when you need to figure out what to do with your money.
Use Tax-Advantaged Accounts
Tax-advantaged accounts like IRA can be a great way to pass on your money to your children. With life insurance, your beneficiaries receive the proceeds tax-free, without having to go through probate or worrying about stock market fluctuations. Fixed or variable annuities allow you to participate in the stock market through mutual funds or fixed-income investments and also have a life insurance component. However, these policies often carry hidden fees so it’s important to shop around and study them carefully.
Invest in Real Estate
Real estate is a good hard asset to own for future generations. Make wise building and improvement choices for the future. When building a home or investing in real estate, you should use durable materials that will outlast disasters and decades of use so you can eventually pass the land down. Inheritors who wish an estate to last several generations should withdraw income only and avoid dipping into principal. Investing in real estate can be a valuable way to preserve your wealth for your children.
Set Up a Trust
In certain situations, it may make sense to set up a trust to control distributions from the estate to the surviving spouse and children. If you or your spouse have children from previous relationships and you don’t have a prenuptial agreement, trusts can ensure that specific assets are passed to designated children. Children who are well off may prefer that you keep every penny of your nest egg rather than hand it over during your lifetime. Discuss the transfer of your estate with them so they can be prepared.
The above suggestions may not be right for everyone, so it’s important to consult an attorney or tax advisor to determine which makes the most sense for you. Evaluating distribution options for your money will help ensure your wishes are followed while maximizing flexibility for your heirs. Preserving your wealth for your children can come through tax-advantaged accounts, real estate, or trusts. While setting up your financial affairs may take some work, it is worth it!
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