Spending The Inheritance

Protect Yourself
Experts say if you want to protect the money you're saving for your relatives, protect yourself first.

"We encourage our clients to take care of themselves first," says Diana Plucienkowski. Plucienkowski is the President of the Financial Planning Division of Meg Green and Associates---a financial planning company.

She adds that protecting yourself first---taking care of your own needs---will ultimately protect the money that you want your children and grandchildren to inherit.

Protect your estate:
Healthcare: One of the most important things of all is to plan for your future in terms of your health. If you don't, your children will pay the price. "They have to have long term healthcare so that if something catastrophic happens they won't have to spend down the estate," says Plucienkowski.

Don't wait until you die: Gift money. You can gift up to $11,000 a year per person without getting taxed. It's a good idea to gift money to your children and grandchildren along the way. Don't wait until you pass on. Not only will you get to see the money go to good use, but "The risk is that sometimes the estate will grow too big and then they have to pay estate taxes," says Plucienkowski.

Common gift ideas:
* Education
* Medical bills
* Art pieces.

For Jim and Sharon King, planning for their future and the future of their children and grandchildren, was a long, tedious, but necessary process. "It's important having my family be secure in their home, in their business, in their health and their education," says Sharon.
But they didn't forget their own needs too. " We don't do it at a cost to us that puts us at a disadvantage," says Jim. To that end they have made arrangements for their longterm health care. They are also enjoying life. Jim adds, "We're going to try and live our lives as best we can," which means they travel, have fun on their boat, go antiquing and enjoy other such hobbies. But, having already decided what will go to which child and grandchild, Sharon says they both feel a great sense of relief, "I feel we can rest easier now."

The King's also feel that it's crucial for their children to learn the importance of planning for the future.

How to raise a millionaire
If you work, you may have an Individual Retirement Account, or IRA. But, did you know your teen might be eligible for an IRA too?

These days, it seems like everyone wants to be a millionaire. From hit game shows to the increasing interest in lotteries, dollar signs are everywhere. If you're a parent, naturally you want your child to have the best of everything, but did you know you could raise your child to be a millionaire? While the idea may seem impossible at first, it's true. If you want your son or daughter to retire in style, all it takes is a planning and saving.

Getting Started

We teach our children about manners, math and reading, but what about money? The financial values you teach kids while they're young will stay with them the rest of their lives. The first step is to teach children how to save. Open a savings account for your son or daughter. Then, encourage your child to put money aside from occasions like birthdays, and from their allowance. You should explain how that money will grow when the bank adds interest.

The ABC's of Stocks

When your child is old enough, it's time to start talking about the stock market. You can use newspapers, television, and the Web as tools to get your point across. Once he or she understands the basics, ask your child to think about businesses that may be good investments. They can be companies your child patronizes, like fast food chains, or a toy store. Your son or daughter can then follow how well these companies are doing, and maybe even invest in a mutual fund that holds some of those stocks.

IRA Saving

If you've been in the workforce for a while, chances are you have an IRA. But, did you know your teenager could have one too? If your child is working this summer or after school, he or she is eligible to open a Roth IRA. If a 17 year-old opens an IRA with $2,000 and contributes the same amount every year, the return will be very rewarding. At an average growth of eight percent a year, the account should be nearly $1.3 million by the time he or she is 67 years old. All that for an investment of $100,000 over 50 years! To top things off, withdrawals from a Roth IRA can be made completely tax-free after reaching the age of 59 1/2. Use this planner to figure out if your child is eligible to contribute to a Roth IRA and how much your teen's contributions will grow in the coming years.

A Family Business

So, what do you do if you're having trouble getting your child to save? If you have the funds, you may want to consider matching his savings. For example, if your teen earns $3,000 this summer and saves $1,000 of it, you may agree to put an additional $1,000 away for him.

Mistakes Are Good

Once you've taught your child how to save money and invest, put him or her in the driver's seat. Your child is sure to make some mistakes. But, those small financial setbacks will help prevent larger mistakes down the road.

Quicken.com, American Savings Education Council, Women's Institute for Financial Education

Did You Know?

49% of students ages 16 to 22 say they always save some of the money they receive from allowance or from a paid job.
American Savings Education Council

58% of parents say they require their children to save money.
American Savings Education Council

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