According to a recent study by UBS, 70% of high-net-worth individuals with retirement portfolios of over $1 million are concerned with their heirs using their inheritance wisely. Let’s look at four things you can do to put your kids in the best position to succeed.
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1. Start with Open Communication
Talking about money with your children can feel uncomfortable. You may worry about losing privacy or creating a sense of entitlement. But the reality is, your kids probably already have a good sense of your financial picture.
They may have seen investment statements on the table or overheard you mention being mortgage-free. Opening the conversation gives you the chance to set expectations, share your values, and provide guidance.
One client, John, had a net worth of over $8 million. He didn’t live lavishly, so his accounts kept growing faster than he spent. His biggest concern wasn’t taxes, it was what would happen if his kids suddenly received a windfall.
So he sat them down for a family meeting. He shared his financial journey, some of the good and bad decisions he had made, and the reasoning behind how his will was structured. It wasn’t about numbers. It was about values. And it gave John peace of mind knowing that his kids understood what mattered to him.
2. Provide Financial Education
Financial literacy is one of the most effective ways to prepare your children. Understanding the basics of budgeting, investing, and long-term planning helps ensure that wealth lasts beyond the first generation.
Encourage your kids to read practical, approachable books like The Wealthy Barber. Introduce them to your financial advisor so they can continue learning and have someone to turn to for guidance, even if you are no longer there.
These early steps help create a foundation that can last for decades.
3. Consider Setting Up a Trust
Even with open communication and financial education, it may still make sense to set up a trust. Trusts allow you to control how and when funds are distributed. That way, the inheritance supports long-term security rather than enabling impulsive decisions.
For example, a trust could release funds when your children reach certain ages or achieve specific milestones like completing school or maintaining employment.
A couple we worked with, Susan and Bob, left $2 million to each of their three children. Their oldest son used the money to grow his electrical business, but when the business failed, he was left with nothing. Had the inheritance been structured as a trust with staggered payouts, he may have had more stability and a safety net.
4. Plan Around Divorce Risk
Inheritance can become vulnerable in the event of divorce if not structured properly. For example, if your daughter receives a lump sum and uses it to pay off a shared mortgage, that money may become joint property. If a divorce follows, her spouse could be entitled to half of it.
One way to mitigate this is through a trust, which is generally considered separate property and often excluded from marital assets. Another is to encourage your children to consider a prenuptial agreement when the time comes.
As always, consult a lawyer about what makes sense in your province. But planning ahead can protect your legacy from unnecessary risk.
Final Thoughts
If your goal is to help your kids use their inheritance wisely, start with values, not just numbers. Communicate openly, encourage learning, and put structures in place that support long-term financial health.
If you also want to ensure the inheritance is passed on as tax efficiently as possible, visit our page to book a personalized retirement and estate planning review.
