Most people think of an inheritance as something you arrange for a loved one to get after you pass away, as specified in your will. And that’s definitely the most common way to do it.
But what if it’s not the only way to give?
What would it look like for you and your family if you gave some of your money away during your lifetime? As long as it wasn’t going to impact your financial retirement needs, what if you gave your children or grandchildren a portion of their inheritance right now?
Some people actually do this. It’s called a living inheritance.
Why choose a living inheritance?
There are both emotional and practical reasons to give some of your money away while you’re still alive, provided you’re using extra funds beyond your retirement needs.
- It’s a nice thing to do. Being able to see your children or grandchildren buy a house, pursue their post-secondary dreams, or simply not have to struggle so hard to get ahead can be very rewarding. The desire to help—and seeing how their gifts positively impact the lives of loved ones—is what motivates most people to give while they’re alive.
- There can be financial benefits. Cash gifts that reduce the size of your estate means you’re also reducing probate fees and taxes on the estate, which benefits your heirs after you pass away. However, it’s important to remember that there can be taxes associated with gifts, depending upon what they are and where you live, and the amount you may be required to pay can be hefty. Always check with a financial advisor before making any decisions to make sure you know the rules and regulations for this kind of giving.
Is it right for you?
While a living inheritance can be a wonderful thing, it has to make financial sense for you. The idea is to give away extra money—whatever isn’t already earmarked for your own retirement needs. The last thing you want to do is give away more than you can spare and find yourself needing money down the road.
That’s why talking to your financial advisor is critical.
Foresters Financial™ members who want to get their affairs in order can take advantage of LawAssure, a complimentary member benefit that can help you protect your family while planning for your future. LawAssure is an online document preparation service that gives Foresters members online access to customizable documents that can be specifically tailored to the personal circumstances and local jurisdiction of the member. LawAssure can help you:
- Write a will
- Make powers of attorney
- Prepare healthcare directives
Visit MyForesters.com for more information and to start using LawAssure today.