Question >> I am fortunate to have been successful and have what I consider a large estate to pass on to my children. My kids are unsophisticated about finances, and I am worried that if I leave everything to them, they may not spend it wisely or, worse yet, get taken advantage of by others. My son is completely disinterested in money, works just enough to get by and spends a good deal of time doing charity work. At the other end of the spectrum, my daughter works a menial job and spends everything on clothes and the latest technology. She often asks for “a loan,” which is never paid back.

Help! Are there ways to set up my estate to best support my son who is completely disinterested in money and to make my daughter understand the value of money?

Answer >> It is amazing how children, reared in the same home and who ate at the same table have such differing attitudes toward finances, right? Yet, we see this often and your concerns about how to best pass on your estate are not uncommon. Fortunately, there are many ways you can set up an estate plan that will protect and support your kids, encourage them to grow their financial sophistication and continue to communicate the values you have learned and developed during your lifetime.

Encouraging them to expand their financial savvy can be done during your lifetime and then, after your death, your estate plan can continue this education by using a well drafted trust document and other succession tools.

It sounds like your son is naturally philanthropic and is interested in supporting charities. In addition to his hands-on work with charities, he must understand that all charities need money to run their organizations. Has he financially contributed to the charities he loves? Give him a monetary gift and encourage him to donate it. The charity will do the rest, I assure you. The charity will let him know how much the gift meant and what was done with the donated funds.

This should encourage him to donate further and help him understand how valuable money can be.

In your trust, include a provision that the trustee is not to make any distributions to your kids until they have either taken a financial management course or otherwise demonstrated the ability to make sound financial decisions.

I recommend Dave Ramsey’s course, Financial Peace University. This course covers the fundamentals of budgeting, debt management, investment and wealth building.

It truly teaches the value of money. Let your kids know they will not receive a dime until they have the financial savvy to handle it and push them to undertake this education now. You can even incentivize them by letting them know if they complete the course now, you will give them x-amount on “graduation.”

Similarly, your trust can allow the trustee to distribute funds to start a business or purchase a home or investment property. The trustee should review any business plans and help them determine if it is a viable business. If purchasing real estate, the trustee must confirm they have funds to pay property taxes, insurance, any mortgage costs and hold a reserve for maintenance needs.

Your trustee can be instructed to donate to retirement plans for your kids, give them “bonuses” when they attain certain levels of education, or the trustee can “match” their W-9 at the end of each year. The trustee should always be instructed to pay for ongoing education.

Finally, the next time your daughter asks for a loan, say “no!” This one thing will make a huge difference in her life, I assure you.

When she knows “the bank of Mom” is no longer dispensing money, she will need to take a giant step forward in her money management. It is difficult, but you need to do this for her benefit.

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust Management Company. This is not intended to be legal or tax advice. If you have a question call (831)646-5262 or email liza@montereytrust.com