— November 3rd, 2022 —
Published in Personal Finance
on investopedia
Written by Stephanie Powers
The decision to leave an inheritance to your children or not will differ for every family depending on the relationship of the family members. In general, leaving an inheritance to your children is good in that it helps them through life, eases their financial burden, represents your love and care to them, and shows that you did well enough in life financially to be able to leave something to your family.
Key Takeaways
- Whether to leave an inheritance for your children impacts your retirement plans, how much you save, and your retirement plan distributions.
- Before deciding to leave an inheritance, personal financial issues should be considered, including your income needs and potential healthcare costs.
- Retirees can risk running out of money in retirement and should consider any tax implications of establishing an inheritance.
- Establishing a trust or gifting assets to loved ones can be effective ways to transfer assets, but there are rules and limitations.
With life insurance, your beneficiaries receive the proceeds tax-free, without having to go through probate or worrying about stock market fluctuations.
Once you have considered all your options, there are several methods to pass along funds to your loved ones. The suggestions [cited in this article] may not be right for everyone, so it’s important to consult an attorney or tax advisor to determine which makes the most sense for you. Evaluating distribution options for your nest egg will help ensure your wishes are followed while maximizing flexibility for your heirs.
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