Pros and Cons of a Living Inheritance
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You’re likely familiar with the concept of a traditional estate plan, where if you include an inheritance to beneficiaries, the assets are dispersed upon your passing. However, an alternative concept exists, called a "living inheritance".
What you should know: This method allows parents to give assets to their children while they are still alive rather than after death. Such inheritances, when structured properly, can help children with significant expenses like buying a home, starting a business, or paying off student loans. This approach not only supports children but also allows parents to observe how their children handle wealth.
Key benefits of a living inheritance include tax advantages, shared experiences, financial relief, and wealth transfer benefits. However, potential downsides include the risk of children losing motivation, parents over-gifting, and family tensions arising. Alternatively, tools like charitable trusts can provide income for children while protecting family wealth.