When you die, you want to ensure that your children are well taken care of, however one of the challenges wealthy individuals face in their lifetime is ensuring that their kids are ready to inherit and sustain wealth for future generations.
Eric Enslin, CEO of FNB Private Wealth and RMB Private Bank, says the responsibility that comes with inheriting wealth and leading the family to grow and preserve it, can easily overwhelm anyone that isn’t adequately prepared.
“High-net worth individuals shouldn’t wait until their kids finish school to start teaching them about the principles of wealth management. A solid foundation of good money management should be instilled at a very young age and gradually developed as the kids grow up,” says Enslin.
Here are 5 key factors wealthy individuals should consider to ensure that their kids are ready for their inheritance:
- Communication – having an open communication rule with kids about the financial affairs of the family leads to better understanding and trust. However, sensitive information should be withheld until heirs are mature enough to handle it.
2. Professional advice – solely taking on the responsibility to equip your kids with all the skills and tools necessary to manage wealth is not recommended.
3. Family values and vision – growing and sustaining generational wealth becomes a challenge if family goals and values conflict. It is essential that the family shares the same vision and values about the management of money. Heirs should understand these principles and be able to pass them on to future generations.
4. Financial responsibility – heirs should be acquainted with the principle of sound financial management early in life. Parents can encourage this by giving kids monthly allowances, incentives for outstanding performance and encourage saving toward long-term objectives.
5. Estate planning – talking to heirs about estate planning helps them know what to expect in the unfortunate event that you pass away. This is also an opportunity to expand more on their inheritance and critical decisions you have taken.
“Equipping kids with the necessary wealth management skills at an early age places them in a better position to succeed at managing and preserving the legacy left behind,” concludes Enslin.
Source: FNB Corporate Communications
Compiled by: Seithati Semenokane / Courant News
