How Should I Divide My Estate Among My Adult Children?
For most people, the primary motivation for creating an estate plan is to create a roadmap for the distribution of assets after they are gone. If you are at that point of your estate planning process, and you have adult children, you may be wrestling with some difficult decisions. You may feel compelled to divide your estate equally yet have serious reservations about doing so. The Coral Gables estate planning attorneys at Stivers Law offer some insight into how to divide your estate among your adult children.
The Parent Problem
For the parents of minor children, deciding how to divide their estate is straightforward because there are no extenuating circumstances. Most parents in that situation simply create a trust and let the trust protect all assets while the children are minors. If the trust has assets left when the children reach adulthood, those assets are split equally among the children. Once your children become adults, however, there are several factors and circumstances that could cause you to hesitate when dividing your estate, such as:
- Money management. Most families have at least one family member who simply isn’t good with money. No matter how many conversations you have with this child about responsible financial planning and spending, he/she ends up with money problems yet again.
- Addiction. No parent wants to admit that a child has an addiction; however, if you have an adult child with a drug, alcohol, gambling, or other addiction, it is imperative that you face that reality when making estate planning decisions. Handing an addict a large sum of money is usually akin to throwing that money in the trash.
- In-laws. If your adult child is married, you have 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 new in-law.
If you have an addict, an in-law, or a spendthrift among your children, it should give you pause when deciding how to divide your estate. If you have a modest to large estate, dividing your estate equally among your children may result in gifting a large lump sum of money to each child. If you are relatively certain that handing one of your children a lump sum of money is a bad idea, it seems only wise, from a financial perspective, to rule out an equal division of your assets. As a parent, however, you may feel a tremendous amount of guilt leaving one of your children less than you leave the other(s). That puts you right back where you were to begin with in terms of deciding how to divide your estate.
Using a Trust to Resolve the Problem
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, there may be a solution – creating a trust. 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 Coral Gables Estate Planning Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about how to divide your estate among your adult children, contact the experienced Coral Gables estate planning attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.