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PASSING ON MORE THAN JUST WEALTH



WHO WILL INHERIT YOUR FINANCIAL WISDOM? Many people who inherit wealth or small businesses are at significant risk for essentially squandering the wealth. An Ohio University study shows that an astonishing 33 percent1 of all beneficiaries lose their entire inheritance within two years of receiving it. The ways they manage to do so are as varied as the imagination, but in our experience we have seen a common thread: mismanagement. How beneficiaries lose their way There are a few key ways beneficiaries struggle to make the right financial decisions with their inheritances. For example, a beneficiary might not have been brought up with a strong education on the basics of money management. Or, even if the beneficiary knows how to properly manage their money, it can be challenging to manage an inheritance while dealing with the loss of a loved one. A beneficiary may invest unwisely, resulting in significant losses, or spend their wealth on an unsustainable lifestyle, rapidly exhausting an inheritance. Worse still, some heirs develop a sense of entitlement that can lead to problems like the well-publicized “affluenza teen,” Ethan Couch. No one wants these outcomes for their family. While a live-in-the-moment attitude can serve young people as they gain life experience, it can be very dangerous when large sums of money are added to their lifestyle. Often, they do not have the same experience and hard-won wisdom as the generation that acquired or built the wealth. Share your wisdom with your wealth One of the greatest gifts you can leave your children, grandchildren, and other beneficiaries is the gift of your wisdom. Sharing the stories, struggles, and journey of success that brought you to where you are, along with the money wisdom you have gained, is as important as leaving a financial legacy in your Will or Trust. Money alone can become more of a burden than a gift if it does not come along with practical guidance. Let your beneficiaries know that they can help build a legacy of wealth that supports them throughout their lives and for generations to come. THREE tips to set your beneficiaries up for success Here are a few pointers for setting up your beneficiaries for success:

  1. Use estate planning tools like Discretionary and Incentive Trusts. In addition to talking with your beneficiaries about financial well being, you can also use certain types of trusts that will reward their smart behavior. Discretionary and incentive trusts are two such tools that can hold payments until beneficiaries complete college or withhold payments unless beneficiaries are proven to be clean and sober. If you do not already have a trust like this, we can work with you to tailor these type