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Checklist: What Your Heirs Need to Know About Money Management

April 26, 2023
Jennifer Kemp
Jennifer Kemp

You’ve worked hard to build your wealth, and you want to leave a financial legacy for your heirs. But you don’t want your wealth to disappear within a generation or two of your death. Yet that’s what happens in as much as 90% of affluent families1 — and one primary reason is heirs who lack the financial knowledge and skills to manage wealth.


Checklist: What Your Heirs Need to Know About Money Management


How do you know if your heirs have what it takes to manage and preserve your family’s wealth? One way is to use a checklist to evaluate your heirs’ understanding of 12 fundamental financial skills. This may help you both identify existing strengths as well as opportunities for improvement — allowing time to develop essential money management abilities before any wealth changes hands.


Related reading: Get tips for how and when to have financial discussions with your family. 


Evaluate and assess existing financial skills

You may find it easier to go through this skills checklist gradually, rather than in one sitting. In addition, keep the age and maturity level of your family member in mind as you talk through each point.


  • Has a budget — knows their income and expenses; understands difference between fixed and discretionary costs; knows how a budget can help someone live within their means.
  • Has an organizational system — whether electronic or paper-based, has a method for keeping necessary financial documents; has tactics in place to safeguard personal financial information.
  • Saves money — regularly saves as part of their budget; understands how compound interest works to help money grow.
  • Manages credit and debt — knows when and how to use debt smartly, including understanding the cost of interest over time; has a plan to pay down existing debt; understands credit scores, and how to obtain and review their credit reports.
  • Has an emergency fund — understands importance of setting money aside for unexpected needs; has an idea of how much to accrue in the fund.
  • Documents long-term goals — has specific, realistic goals with steps to achieve them, based on their current income; may discuss how an inheritance could impact the goal and plans.
  • Started retirement savings — understands basic differences between common types of retirement accounts and related tax advantages; sees the value of starting early; has an idea of amount needed for retirement.
  • Understands basic investing concepts — knows the relationship between risk and return; has basic knowledge of stocks, bonds, other forms of investment and how the market works; understands the importance of diversification, investing regularly and having a long-term mindset.
  • Knows estate planning basics — realizes importance of having an estate plan to ensure wishes are followed, and how it may help mitigate taxes and preserve family wealth; understands the essential documents involved.
  • Understands basic trust concepts — has a fundamental understanding of what trusts are, common types of trusts, and when, why and how they can be used for wealth management and preservation.
  • Plans for gifting and philanthropy – understands how gifting and charitable donations can be used for wealth management and preservation, including potential tax benefits; has or is developing a long-term philanthropic vision.
  • Has a financial support team — works with a financial advisor, CPA, tax advisor and possibly an estate attorney; understands how these professionals can help develop financial plans to achieve goals.


It can also be useful to share examples from your own life, so your heirs can see how these skills translate to real life, and how they’ve helped you maintain your finances and build wealth. And remember, there is often no better way to learn than by doing. Encouraging your heirs to put these concepts into practice with their own money may help them build a solid foundation for the future — with or without an inheritance.


Expand the discussion

As you work through the checklist of financial skills, also consider taking actions to broaden the discussion and further help prepare your family members for their inheritance.

  • Share your wishes and expectations regarding what you hope they’ll do with the inheritance, giving them guidelines and a sense of structure.
  • Explain their role in your estate plan and the steps they’ll need to take when you’re gone, including any specific responsibilities.
  • Involve them in financial discussions and decisions to help them understand your perspective and strategic approach, and so they begin to feel involved in the management of the family wealth.
  • Introduce them to your financial support team, so they’ll be comfortable working with your professionals as wealth transfers from you to your heirs.


Related reading: Discover more ways to ease your inheritance worries and help wealth transfer go smoothly. 


How we can help

Your Hancock Whitney Banker can help you get the conversation started with your heirs and work with you to assist them in developing financial knowledge and skills that can help preserve your family wealth for multiple generations to come.


Talk to a Private Banker


1 Yahoo.com, "5 Huge Lies About Generational Wealth," https://www.yahoo.com/video/5-huge-lies-generational-wealth-181719865.html


The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented.

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation.

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