4 Essential Inheritance Skills

Wealth advisors often encourage parents to create a trust when leaving money to their children.  With a trust, you and your spouse can appoint a wise trustee who will be given discretion to assess whether children are able to handle receiving money from the trust.  Yet, the question then arises, what should trustees look for to make this assessment?  How do parents know if their children can handle substantial sums of money?  Below are four critical skills children need to develop before they are ready to receive money form their parents or a trust. 

1. Earn their own money.  A number of grown children said it was not until they earned their own income and lived within their means that they reached the point they felt like their own person.
2. Setting and pursuing goals.  Encourage children to find jobs that they enjoy, but stick through the rough patches early in their careers and stay in jobs long enough to learn what they love and what they do not love.
3. Having a sense of self-worth.  Inheritors should have a sense of a core identity that was built upon their own accomplishments and choices in life rather than on what had been given to them. 
4. Having resilience and determination.  Children must learn how to deal with setbacks and plow through them on their own.  Furthermore, they must understand the consequences on their own and figure out how to move on. 

See Covie Edwards-Pitt, 4 Critical Skills Your Child Needs to Develop Before Inheriting Your Money, Forbes, Sept. 15, 2014.