You have spent a lifetime building up your personal wealth and resources. You probably want your children and grandchildren to display a similar work ethic. At the same time, you likely have hopes of giving people you love financial resources when you die.
Wanting to leave behind a legacy that makes the lives of the people you love a little bit more comfortable is noble. Sadly, you won’t generally get to see the positive impact of your bequest on the lives of your grandchildren.
Offering your grandchildren an advance on their inheritance could be a way for you to enjoy the legacy that you have carefully planned for the people you love. In what sorts of situations would an advance on an inheritance be a reasonable choice?
Will your grandchild use these resources for their education or a business?
Getting started out as a young adult isn’t easy. Many new professionals start their first job with six figures of student loan debt. Others may have to work for years in physically demanding and exhausting positions in order to save up enough money to start their own company.
If you already know what your grandchild aspires to in their career, you might have the resources to help them get an early start. Whether you help fund their schooling so they have to take out fewer loans, give them a downpayment for a house or give them seed money for a business, an advance on their inheritance could be the foundation for financial success in their future.
Has your grandchild experienced some kind of tragedy?
Was your grandchild left an orphan because of a car crash while enrolled in high school? Have they had to overcome medical hardship, like a battle with cancer in their early life?
They could have more challenges because of their personal background than many other people their age. Giving them an advance on their inheritance won’t necessarily undo the harm that their life circumstances have caused, but it can put them on more even footing when compared with their peers.
You can help cover medical expenses or provide resources that will give your grandchild a better start to adulthood.
You need to diminish your resources for your own future security
Moving some assets into a trust and making strategic gifts to family members and others can be important strategies for those who need to qualify for Medicaid or who want to protect their assets from creditors when they die.
If you have a personal incentive to diminish your property, then that could also be a reason to give an advance inheritance to your grandchildren. You might even spend some of it on fun activities or travel with them so that they have memories to cherish when you’re gone.