I help wealthy families prepare their kids for inheritance. I recommend this 3-step process to any parent.

Ken Polk, the founder of a family office, recommends a three-step plan to help wealthy families prepare their children for inheriting substantial wealth. Polk, who began implementing this process with his own four children, suggests that preparation can start as early as age 6, evolving as the children grow older.

The first step, building character, involves helping children identify their personal values and aspirations. Polk recommends asking children to write a letter to their future selves, outlining the eight character traits they hope to embody. This exercise aims to foster a sense of purpose and prepare children for the eventual inheritance they will receive.

The second step focuses on teaching financial discipline from a young age. Polk suggests introducing children to the concept of dividing their money into three jars or envelopes: one for giving, one for saving, and one for living. He calls this the "undefeated financial plan." By age 12, Polk's children had already started using this system with their own bank accounts, gradually increasing the responsibility as they got older.

The final step involves explaining the inheritance and its purpose to the children when they reach their late teens or early twenties. Polk describes this as a "legacy letter," which he helped families write to convey the spirit behind the money. This letter should not focus on the legal documents but rather on the values and intentions behind the inheritance.

By discussing the family's financial situation and the reasons for the inheritance, parents can gauge their children's readiness to handle the financial responsibility. Ultimately, Polk stresses the importance of letting children make their own financial decisions as they grow, trusting that they have been equipped with a shared system of values and principles.