The 3-step plan wealthy families are using to prepare kids for an inheritance 'reveal' when they’re young adults — starting as young as 6

Avoiding discussions about inheritance can lead to family rifts and infighting. It can leave family members expecting something — and even making plans for the inheritance they think they’re going to receive, which can obviously have a negative impact if it turns out the money they planned to have isn’t there.

And for younger children, keeping an inheritance or a trust a secret and then suddenly revealing it when they come of age can also backfire. So, too, could telling them about the money, but not teaching them beforehand how to handle it responsibly.

Experts agree that preparing children for an inheritance, no matter the size, is an important part of overall financial health.

Ken Polk, founder of Arlington Family Offices, a wealth management firm for wealthy families, told Business Insider that he has three steps he recommends to parents who want to teach their children how to manage inheritances — and it’s “a process that begins in childhood and evolves as your kids grow up.”

Emphasize character first

Polk’s first step is a big one, it not only impacts the other steps, but really your child’s life as a whole.

He noted that wealthy individuals may wish to have “a legacy that lasts.”

“Ultimately, preserving legacy comes down to a child’s character and who they’re becoming,” Polk told Business Insider.

Personal finance expert Dave Ramsey recently addressed this issue for a caller to The Ramsey Show, saying that he raised his own children “not to be good children, but to be good adults.”

“I’m going to teach them how to save. I’m going to teach them how to spend. I’m going to teach them how to live on less than they make,” he said.

He added that children who are expecting inheritances should still have to work. “Do not allow them to be entitled brats that don’t work.”

Polk recommends an exercise of having children name eight character traits that they would like to embody, and then getting them to write a letter to their future selves. “It’s about helping them work backward from the person they want to become,” he told Business Insider.

He also noted that it’s important to help children figure out “their purpose in life” before any inheritance is in their hands.

Start having conversations young

Polk says that children as young as six can start to learn the basics of money management. He recommends a system using jars or envelopes, and having kids divide their money into three categories: “some to give, some to save, and the rest for living.”

When his children turned 12, Polk then graduated them to actual bank accounts, taking them with him to the bank to open them. With their bank accounts, he encouraged the same “give, save, live” system.

Teaching children how to make financial decisions on a smaller scale means that “you can gradually entrust them with bigger ones,” Polk says. Once this framework is in place, Polk says they’ll be more prepared to learn about what their inheritance could look like.

Tell children not only what, but why

Polk says that revealing your family’s financial situation to your children can happen between the ages of 19 and 22. “That’s when you begin walking them through the family’s finances and talking more openly about their inheritance,” he said.