This is the third post in a 3-part series in partnership with Bridget Wyatt and Lindsay Sabel of Merrill Lynch Wealth Management.
You’ve worked hard to build wealth for your family, and now you’re facing a delicate balance: How do you leave your children a meaningful inheritance while protecting them from potential pitfalls like poor financial decisions, creditors, or divorce?
To explore these protective strategies, we sat down with Bridget Wyatt and Lindsay Sabel from Merrill Lynch Wealth Management. Here’s what you need to know about your options.
A Will, Family Trust, and More
First, you’re not alone in your concerns. “This is a topic that comes up a lot,” assures Lindsay. In fact, one of the biggest areas of focus for Lindsy and Bridget’s team is helping clients navigate inherited assets and understanding how clients would like to make sure that they leave behind their hard-earned money to their next generation.
“We also spend a lot of time with people starting their next chapter after a divorce, so this is absolutely a priority as they look to leaving their wealth to their kids,” she says.
Working with both a financial advisor and estate attorney to structure these documents is crucial. Below, Lindsay and Bridget detail the key things to know.
Will: A will can be written according to your wishes, meaning you can outline specific ages and structures for your wealth to transfer to and into for the next generation. You can also specify terms in which your assets will be transferred.
Family Trust: In the case of a bankruptcy, divorce, or death in the family, you can create a family trust within the will which will ensure that your assets are passed down to your direct descendants, children or grandchildren.
Bridget Wyatt and Lindsay Sabel of Merrill Lynch Wealth Management
Protecting Their Wealth
To protect your children from poor decisions, you can set age limitations and structure your will and trust efficiently. Most importantly, select a trustee who will act as a good steward of your wishes when evaluating asset distributions.
“We work with each of our clients in talking through all of these major decisions, preparing them for conversations with their lawyer, accountant, and family. In a lot of cases, we have direct conversations with our client’s children about expectations and wealth more broadly,” notes Bridget.
One final tip: Lindsay encourages involving a third party “to explain and take the pressure off of clients in having these complicated discussions about the potential impact and mechanics of an inheritance.”
Read more financial planning content from Bridget Wyatt and Lindsay Sabel of Merrill Lynch Wealth Management:
3 Strategies for Gifting Money to Your Children
Should You Open a Custodial Account, 529, or Trust for Your Kids?