If you are a parent, you have undoubtedly tried to treat your children equally and not play favorites. When it comes to deciding how to distribute your estate, you probably feel pressure to divide your estate equally as well. When your children are minors, deciding to divide your estate equally among your children may be an easy decision. You will likely create a trust and let the trust protect all assets while the children are minors. Once your children are adults, however, deciding how to divide your estate becomes considerably more complicated. The Los Angeles estate planning attorneys at Schomer Law Group, APC explain what to do when you do not want to divide your estate equally among your children.
Reasons Why You Might Hesitate to Divide Your Estate Equally
There are several reasons why you might hesitate to split your estate assets equally among your adult children, including:
- The spendthrift. You can find one in almost every family, that one family member who simply isn’t good with money no matter how much effort you put into teaching him/her money management skills. If that applies to one of your children, you may feel that handing him/her a sizeable inheritance is akin to throwing money away.
- Addiction. As a parent you probably don’t want to admit that your child has a serious addiction; however, if you have an adult child with a drug, alcohol, gambling, or other addiction, it is imperative that you acknowledge the problem when making estate planning decisions because failing to do so could have disastrous consequences, both for the inheritance you leave that child and for your child.
- The in-law threat. If your adult child marries, you gain a son-in-law or daughter-in-law. The moment the ink is dry on the marriage certificate, your new in-law becomes a potential threat to your assets. Anything you gift to your child could be lost in a subsequent divorce or because of mismanagement by the spouse, giving you cause to be concerned about gifting assets to your child.
- Mental health issues. Managing an inheritance may be asking too much of an adult child who struggles with mental health issues. Again, you must be honest with yourself when evaluating your child’s ability to handle an inheritance. In addition, if your child has special needs, receiving an inheritance could jeopardize his/her eligibility for much-needed state and federal assistance programs such as Medicaid and SSI.
How Can Estate Planning Help?
If you do not want to divide your estate equally and gift those assets outright to your children, you may wish to consider using the following estate planning alternatives instead:
- Letter of Instruction. It can be heart-wrenching to think about disinheriting a child. Fortunately, there are estate planning strategies and tools that may be able to help if you are struggling with the issue of equal gifting. One of the most important steps to take if you have made the decision not to distribute your estate equally is to explain your decision while you are still here or in a Letter of Instruction that is included in your estate plan. Failing to do so dramatically increases the likelihood of litigation after you are gone.
- Trust Agreement. If you are concerned about handing one (or more) of your children a significant sum of money in a lump sum, yet you do not want to leave that child less than you leave your other children, creating a trust may be the ideal solution. A trust allows you to appoint a Trustee to manage and invest the assets you transfer into the trust and to oversee the administration of the trust terms. Consequently, you can decide what those assets may be used for and when they can be distributed. Using a trust lets you leave a significant amount of assets to any child, but under the watchful eye of a Trustee and only to be used according to the terms you established.
Contact Los Angeles Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to distribute your estate assets among your children, contact the experienced Los Angeles estate planning attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.
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