Planning as a parent is an endless task. You’re juggling countless daily plans like what to make for dinner with long-term plans like saving for their college. An estate plan can seem like just another thing to do, and you wouldn’t be alone if you just wanted to put together a standard will and call it a day.
However, a standard will can contain a flaw that disrupts your child’s life rather than secures it.
Is an 18-year-old ready for an inheritance?
In Wisconsin, if your child inherits assets outright through a will, those assets are typically managed for them while they’re under 18 and then turned over for them to control once they reach 18. While they can vote and join the military at this age, they may not be ready to manage a large life insurance payout or the equity from a family home.
Unless you utilize planning strategies like setting up a trust, your child can be solely responsible for controlling their inheritance. This can lead to impulsive spending at a time when they should be focused on their education or beginning a career. A sudden influx of cash can change a young person’s motivations during their most formative years.
Creating a roadmap for financial maturity
A trust allows you to act as a silent mentor, guiding how and when your children access their inheritance. There are several approaches you can take to help your child manage their new wealth, including:
- Releasing a portion of funds upon completion of high school or college
- Scheduling periodic releases of funds to stagger payouts
- Providing matching funds for every dollar they earn in their first professional job
- Distributing the remaining balance at age 35 once they have established their own financial habits
By setting these markers, you can provide a safety net that rewards maturity. This structure prevents a large sum of money from becoming a burden or a distraction while your child is still learning how the world works. That said, it is vital to guide without micromanaging, as being too restrictive can often be counterproductive to a child’s development.
Rather than thinking of estate planning and setting up a trust as a means of controlling your children from beyond, think of it as protecting them during their most vulnerable years. By building guardrails instead of handing over the keys at 18, you create space for them to grow into financial responsibility naturally.