Whether you want to give your kids the best start in adult life or make sure they’re financially stable when you’re gone, putting some money aside can often provide some peace of mind. But what is the best way of creating such a fund? There are many methods of creating an inheritance fund, all of which have their individual perks. Here are five methods that could be worth choosing from.
Set up a savings account
The most common way of funding your kids and grandchildren’s future is to set up a savings account. This could be money that you spend on your children, or money that you give to them one day with your permission. Savings accounts will collect interest adding to the amount already in there. You may wish to choose a fixed rate bond as provided by companies such as Capital-returns.com, which will ensure the interest rate doesn’t go down in the future.
Put your money in a trust
A trust is a savings account that can only be opened after a certain amount of time. This can be set up in someone else’s name. For example, it could be an account for your child that can only be opened when they reach 18. Further restrictions can be added if multiple people can access the account but you want to make sure no-one overspends. There are also POD accounts that only become accessible when you die.
Invest in a valuable asset
Another option could be to invest in something that you think will rise in value. This could then be given to your kin in a will, or sold at a later date – the money of which is then given to your children or put in a trust. Such an asset could be a business, a property, company shares, gold or even something obscure like a rare vinyl collection or a piece of artwork.
Take out life insurance
Some people may consider taking out life insurance as a way of leaving something behind for their family. Term life insurance as provided by companies like TermLifeInsurance.co can be a way of planning for unexpected death, which could leave your family financially burdened if you were the main breadwinner. Another option could be whole life insurance, which is not for a set period although may be more expensive in the long run.
Leave your IRA to your children
Alternatively, you could leave your individual retirement account to your children. This may be a better solution if you are already at a senior age and cannot take out a life insurance scheme due to high rates. Some people may do this on top of leaving a savings account – none of us know how long we’re going to live and there may still be many years ahead for you to live off your IRA.