Prospective clients often ask advice in designing an inheritance plan for their children to inherit assets. Typical concerns are the children’s ages, maturity level, divorce risk, and the size of the potential inheritance. Here are three important factors to consider in designing an inheritance:
1. Should all children be treated the same?
Parents overwhelmingly want to treat their children exactly the same in an estate plan. But often, special circumstances may require less than total equality. What if one child married a very wealthy person? Or is active in the family business? What happens if one has creditor issues and is about to declare bankruptcy?
A customized estate plan should take into account each child’s unique circumstances.
2. Who is the best person for the job?
Wills and trusts have fiduciaries, or personal representatives and trustees, in charge. Many parents may want the oldest child to perform these jobs without considering whether he or she has the necessary skills. The best course of action is to name the best person for the job.
Additionally, clients should be wary of leaving one sibling in charge of another’s money. Once parents are deceased, decades-old resentments can resurface and make the arrangement quite challenging. The wrong person in the job can, at a minimum, increase costs down the road; at worst, it could result in an estate or trust being administered incorrectly or even in litigation.
3. Address your children’s weaknesses.
Clients may have trouble coming to terms with a child’s drug or alcohol addiction or mental illness. However, it is extremely important to take these issues into account. Unrestricted access can fuel an existing problem or cause ineligibility for important government assistance programs. Even though it can be a difficult conversation, be sure to acknowledge any concerns about a child’s ability to handle finances, the child’s mental health and addictions.
Designing an inheritance plan requires consideration of many factors. Reviewing them will result in the best possible estate plan for your particular circumstances. Come in and let us help. If you’ve already created a plan, let’s make sure it has been updated to reflect current circumstances. At Silverman Law Offices, we are here to help.