Parents know that a big part of their estate planning is simply leaving money to their children. Physical assets do play a role, but many parents simplify their estate by selling assets before they pass away -- selling the family home when they go to a nursing home, for instance, and simply leaving the money from the sale to the children.
But what if you're worried about how your children are going to spend that money? Have they always struggled to make good financial decisions? If you're about to leave a child an inheritance worth $3 million, what can you do to make sure they do not waste everything you have worked so hard to earn?
To some degree, you cannot guarantee it, but that does not mean there aren't steps you can take to make it less likely. Some parents use trusts that pay out at certain ages, for instance, holding that money back until their children are older and more mature.
One other option you have is to use a simple financial test to see how they do. Take $10,000 and give it to the child as a gift. Do not give them any instructions on how to use it. You can gift this much without a tax penalty, and it's money they would have gotten in the inheritance anyway. What they do with that money tells you just how worried you should be and how much thought you have to put into more complex options to protect your estate.
No matter what you decide, make sure you know what legal steps to take to make your estate plans reflect your goals.