Bill, Glenda, and Theresa are siblings. Glenda runs the family business and is married to a doctor. They have chosen not to have children. Bill is a teacher and his wife Sheila is a stay-at-home mom and they have two children. Theresa is the youngest of the three and is a caregiver for their father, Don, who has Parkinson’s and helps their mother, Elise, who has physical disabilities.
Most parents want to treat their children fairly in their estate planning, and many assume that means having their children inherit equally. But there may be special circumstances to consider before the family pie is divided into equal parts.
To demonstrate how fair doesn’t always mean equal, take our example above. Don and Elise may want to leave more to Bill who struggles to support his family on a modest teacher’s salary than to Glenda who married well and has chosen not to have children. Or, they may want to compensate Theresa who has given up part of her own life to care for them. Lastly, since Glenda runs the family business, they may want to leave the business to her and compensate the others with other assets and/or life insurance.
If you have children, when considering how to distribute your estate, not only do you need to decide what share each child should receive, but also when each child will receive full use of his or her share of your estate. Good estate planning means that the inheritance you leave to each child will stay in an asset protection trust for that child for the rest of his or her lifetime. If the child is fiscally responsible, the child can act as his or her own trustee and can make distributions to himself based on guidelines you provide, but assets that stay in the trust are protected from disability, creditors (such as bankruptcy and divorce), predators (those with undue influence on your child), and even long-term care expenses down the road. If the child is not yet fiscally responsible, then someone else would typically act as trustee until the child reached a suitable age of maturity.
If you are quite wealthy, you may want to leave your children enough that they can do anything they want, but not so much that they will do nothing at all. You don’t have to leave everything to your children. If you have sizeable assets, you can set up trusts for your grandchildren and future generations. You can also make contributions to charitable, educational and religious organizations.
While more than 50% of Americans feel it is important to leave an inheritance to their children and other beneficiaries, the majority (more than 120 million Americans) have not yet made any plans for their estate. Overlooking estate planning results in many wasted dollars and hours of frustration and emotional hardship each year that can be minimized with advanced planning and action.
If you do not have a properly-drafted trust-based estate plan when you die, the law will step in and force your estate through the nightmare of probate, a complex, time-consuming, expensive and emotionally draining process that most people would not wish on a beloved family member. A trust-based estate plan should be an essential part of your lifetime planning. For peace of mind, the time to address or update your estate plan is now. Call the Fairfax and Fredericksburg Elder Law Firms of Evan H. Farr, P.C. today at 703-691-1888 to set up a consultation.
About Evan H Farr, CELA, CAP
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