Leaving an inheritance for your children does not have to be difficult or complicated. With proper planning and the right tools, you can secure your children’s financial future and maximize their benefits without stress. 

In the below blog post, we will discuss how you can maximize the inheritance you leave for your children and also review how an experienced estate planning attorney can assist you with the process.

Prepare a Thorough Estate Plan

Preparing a detailed estate plan is one of the best ways to help maximize the inheritance you leave to your children. However, this estate plan will need to be comprehensive and include certain documents such as a Last Will and Testament, healthcare directives, and power of attorney. If you need help figuring out where to start with this plan, consider speaking with a skilled and detailed estate planning attorney. These legal professionals can help you take on the legal complexities often associated with creating an estate plan and ensure that the documentation you prepare aligns with your wishes.

Manage Expectations

When it comes to estate planning, parents should provide their children with a basic sense of where they stand financially and what they are likely to receive. However, parents should also let their children know that this amount can change if certain situations arise, such as medical care needs. Finally, parents need to ensure that their children know the whereabouts of important documents.

Consider Creating a Trust

Trusts are influential tools that enable individuals to not only manage but also distribute their assets according to their wishes. For example, a revocable trust can help individuals avoid the probate process while maintaining privacy. On the other hand,  irrevocable trusts can provide individuals with tax advantages and also protect their property and assets from legal suits and creditors.

Life Insurance

Life insurance offers a dependable way to provide your children with a tax-free inheritance. In many instances, the death benefit can help children cover estate taxes and debts and provide them with financial stability. However, parents need to make sure to designate their children as beneficiaries of these policies and also review the policy regularly to ensure it still aligns with their financial situation.

Make Annual Gifts

Another way to help maximize a child’s inheritance is for a parent to make an annual gift to them while they are alive. In the United States, individuals can gift up to a certain amount each year without incurring a gift tax (this amount can change according to the tax laws). By taking this approach, parents can reduce their taxable estate while providing financial support to their children. However, before pursuing this route, consult a skilled estate planning attorney to ensure this approach is handled correctly.

Try To Reduce Taxes

Understanding the tax implications of an inheritance is essential. That is why consider working with tax professionals and financial advisors to develop a strategy that can help you minimize estate taxes and other potential tax liabilities. 

Consider 401(k)s and Roth IRAs

Consider leaving your retirement accounts to your kids through an inherited IRA or a Roth IRA. With a Roth IRA, your children can make tax-free withdrawals, while an inherited IRA requires minimum distributions based on the age of the beneficiary. However, both options will allow children to obtain funds gradually and potentially minimize taxes.

Reach Out To Losavio & DeJean Today To Discuss Ways To Maximize Your Child’s Inheritance

At Losavio & DeJean, LLC, our goal is to assist our clients so that they can live well, independently, and securely for as long as possible. That is why our skilled attorneys work with clients to help them protect assets and property and offer services in tax planning and business planning, wealth preservation, financial issues, and more. 

For further information about maximizing your child’s inheritance, contact Losavio & DeJean, LLC today.