If you feel comfortable enough and are sure you have provided sufficiently for your 
own future, you may want to consider giving your children or grandchildren an early inheritance. This can help them out of a tight spot and give you the opportunity to share your wisdom about managing money or assets.
Giving them an asset along with your expertise on how to manage it is priceless. However, before you make this decision, you should consider all the dynamics and the possible impact of your decision.
Giving a child or grandchild an early inheritance has several benefits:
It may provide life-saving financial support if they have been through hardship such as divorce, retrenchment, or the loss of a business.
If your estate is likely to attract estate duty, an early inheritance can reduce the value of your estate and hence the tax payable by your estate.
No one knows what lies ahead for you and your children. Family dynamics change all the time. You may make a decision about an early inheritance that seems reasonable now, but it may not feel as fair a number of years later.
Family members get married, divorced, remarried, and have children, leading to blended families. Making a decision about an early inheritance when things keep changing may lead you to regret your decision in the future.
You also run the risk of your inheritance ending up in the wrong hands. If, for example, you give an inheritance to a child and they divorce, the money or other assets you gave them could be divided between the spouses, depending on their marital regime.
When it comes to an early inheritance, favouring one child over the other can lead to family strife. If you want to help a child because they are struggling, this can cause conflict unless your reasons for doing this are clearly communicated and understood by everyone.
To avoid misunderstandings, discuss your plans openly, and consider offering the early inheritance to all your children. Consider letting them decide if they want their inheritance now, or if they prefer to wait.
You should also take into account the fact that the child who receives an early inheritance may gain significantly more than a sibling who waits to inherit from your estate, because they have had access to an asset for much longer. For example, if you give one child R500 000 to start a business, this business could prosper and grow to be worth millions by the time you die. Your other child may inherit the same R500 000, or its inflation-related equivalent, years later.
If a child asks for an early inheritance, be tactful and explore why they are requesting 
it and what they intend to do with it.
You also need to clarify your perspective and needs.
Guard against a sense of entitlement in your child, as an inheritance is a privilege and not a right. Children should not expect to inherit from you.
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REMEMBER It is much simpler to let your children inherit once you have passed away, because you no longer need the money. |
Be careful of committing yourself to giving an early inheritance and then jeopardising your own financial security.
You may think that if you run out of money, your children will support you, but life happens and 
any one of a number of scenarios could play out: your child or children may emigrate, die, suffer from an illness, marry someone you do not get on with, lose money in a business. This may result in them being unwilling or unable to support you.
You may be confident about your current financial situation, but you have no idea how long you will live or whether you will face large unexpected medical expenses in the future. How long your money will last is an important consideration, and you should get a financial adviser to help you determine whether you have enough and to test different return and life scenarios.
