Leave a legacy that supports your kids’ dreams without creating nightmares for you.

Warren Buffet once said, “I want to give my kids enough so that they would feel that they could do anything, but not so much that they could do nothing.” Here are some ideas to help you create a trust fund that provides for your child, or even provide tax-free gifts while you are still around that can help your child pay their college tuition and provide financial planning:

Start with preventative maintenance. One of the most valuable things you can pass on is the knowledge of how to handle money wisely. See Teach Your Children Well for ideas to get them started down the road to good financial know-how. There are also many online resources—such as The Children’s Financial Network and The Financially Intelligent Parent teach parents how to guide their children toward financial responsibility.

Send parting gifts. Remember that you don’t have to die to share your wealth. The IRS allows parents to give tax-free gifts of up to $11,000 per person annually. Giving away money in smaller amounts like this also provides the benefit of seeing your children use your money to build better lives for themselves.

Skip a generation. Give your children a financial break by helping fund your grandkids’ college educations. State-sponsored 529 college savings plans and Coverdell Education Savings Accounts let grandparents do this with a tax break, too.

Create a charitable foundation. Setting up a family foundation provides an opportunity to model benevolence, hopefully make a difference in the world, and receive some nice tax benefits. See an attorney, CPA, or financial planner skilled in family-run charitable foundations to set one up for your clan. (See Hire a Financial Advisor if you don’t already work with one.)

Put it in a trust with strings attached.
There are two basic ways to establish a trust that gives your heirs a good combination of funds and guidelines:

The Bottom Line: Your estate bequest doesn’t have to be a handout. Wisely structuring your wealth lets your kids lead productive lives without zapping their ambition.