Estate Planning to 'Protect' Your Children

If you're a parent, you likely want some, if not the majority of your estate to go to your children. In the scheme of things, this is the ultimate goal, however, if your children are minors, you're going to want to take a few things into account.

Do you remember how good you were with money when you first graduated from high school? Since states presume that the age of majority is 18, this means that probate laws presume that an 18-year-old can manage any inheritance that they receive through a probate administration, or as proceeds from beneficiary designations, such as

  • Bank accounts
  • Life insurance policies
  • Retirement accounts

In reality, this could equate to a windfall inheritance of hundreds of thousands of dollars for the typical estate. If this makes you nervous, there is a better way. By taking the time to create a revocable living trust that gives you control during your lifetime, you could decide exactly when and how your child receives their inheritance.

Many parents set age milestones for when their children receive an inheritance; for example, they get 50% of the estate when they turn 25, and the other 50% when they turn 30. Or, they get the money when they work hard and achieve something such as a bachelor's or a master's degree.

The choices are unlimited, and an estate planning attorney can explain your options in detail.

Special Considerations for Adult Children

While children are under 18, most parents are inclined to treat them equally when it comes to distributing their assets upon their death. However, all children change when they grow up and sometimes despite our best efforts, they don't turn out to be as successful or responsible as we might have hoped.

If you have an adult child with a substance abuse problem, a gambling problem, a spending problem, or an abusive spouse that you don't care for, would you be comfortable handing over hundreds of thousands of dollars? Would doing so cause them to spiral out of control?

Every family is different, and each family faces unique challenges. The good news is that with the assistance of a good lawyer, you can do what is in the best interests of your family while maintaining control over your estate, even long after you're gone.

Categories: Estate Planning, Trusts