Estate planning helps secure your family’s financial future. One of the key components is deciding how to leave inheritances for your children.
By carefully considering your options and making informed decisions, you can ensure that your children receive the financial support they need after you are gone.
Consider what you want to achieve with the inheritances you leave, whether they are to provide for your children’s education, help them buy a home or simply ensure their financial security.
Types of inheritances
There are various ways to leave inheritances for your children. For example, you can designate a specific sum of money for each child (cash inheritances). Similarly, if you own real estate, you can leave it as an inheritance. This might include your family home, vacation property or rental properties. Stocks, bonds and other investments can also be part of your inheritance plan.
Wills and trusts
You can create a will or set up a trust. A will outlines the distribution of your assets, while a trust provides more control over how and when your heirs receive their inheritances.
Be mindful of tax implications when planning your inheritance. For example, the Minnesota estate tax rate is 13% to 16% and applies to estates of more than $3 million. Certain assets may have tax consequences that could affect the amount your children receive. Consulting with a financial advisor can help you minimize tax liabilities.
Discuss your inheritance plans with your children. Open and honest communication can help avoid misunderstandings and conflicts down the road, especially when your children understand your intentions and the reasons behind your decisions.
Life circumstances change, and so should your estate plan. As your children grow and your financial situation evolves, revisit your inheritance plan regularly to make necessary adjustments.