When going through a divorce, you’ll probably want to do whatever possible to protect your assets. One way you can do that is to leave an early inheritance to your Illinois children. These are some things to consider if you want to go that route.
Be aware of taxes
Consider the tax implications if your goal is protecting your assets before a divorce. You can give your children an inheritance at any point; your lifetime estate and gift tax exemption allows you to transfer assets to your kids for free up to a certain point. However, the exemption is set to decrease in 2026.
Give an appreciable asset
You can significantly expand your child’s inheritance by giving it to them as an appreciable asset. For example, you might want to help your child buy a new home, which appreciates over time. Another option is to give them stock that can accumulate wealth in the future.
You don’t have to give equally
If you have more than one child, you don’t have to give them equal inheritances. Depending on their situation, you might want to give one child a larger inheritance for a specific purpose such as starting their own business or attending a prestigious school. Or one of your kids might be open to an earlier inheritance than the other or others. Discussing these matters openly can help ease the subject if you’re considering giving one child more than the others.
Avoid dipping into retirement
It’s best to avoid dipping into your retirement account to leave an inheritance. Those funds are meant to go toward your future and could prevent needing help from your children later.