Why you Should Give your Kids Money Now and not in Your Will
October 9, 2020
By Rahul Iyer
When you hear the word ‘inheritance’ you likely think of money you leave your kids when you die. But what if you could leave it now, while you are alive? Wouldn’t you rather see your kids enjoy your money?
What if now were a more ideal time because they are in their younger adult years and could benefit from a windfall that would set them up for the future?
There’s a lot of factors that go into whether or not you should give your kids money now or in your will, but the bottom line is that most of the time, an early inheritance is worth it.
Waiting Might be too Late
If you keep the money you intend to give to your children until you die, they may be in a position that they don’t need it. Not that anyone turns money down, but wouldn’t you rather gift it to them when they do need it?
Whether your children are in college and need money for grad school, want to make a down payment on a house, or want to change careers – these are all good times to give them money to help them grow and better their future. If you wait until you die and you live past the average life expectancy of 79 years old, chances are your children will be financially set.
Isn’t there more value in seeing them grow their future using the funds you provided?
Your Kids can Skip Probate
There’s nothing more frustrating than dealing with probate after a loved one dies. The process while typically short has the potential to last a few years. That’s a few years your beneficiaries are without the funds and without you.
If you give an early inheritance, they skip probate and the money goes straight to them. As long as you stay within the $11.58 million gift limit, you don’t have to worry about your children getting taxed.
You get to Watch your Kids Enjoy It
Perhaps most important is the enjoyment you get to see in your children when they receive the money. Whether you give it to them as cash or you spend it in other ways, such as taking them on a luxurious trip, helping them pay for post-secondary education, or even helping them buy a house, you get to see the joy they create with the help of the funds you provided.
Be Careful When you Give your Kids Money Now and Not in Your Will
Make sure you’re thinking long-term before you give your kids money now. Do you have enough in your retirement savings to cover your expenses for the rest of your life? If you’re still on the younger end, you may need more money than you anticipate. Think through the costs and plan for the worst case scenario so you don’t put yourself in a financial bind just to see your kids enjoy the funds.