When your children were young, your primary concern was probably how to provide for them in the event you and your spouse died. Now that they’ve grown, they’re probably still the center of your estate plan. After all, who but your children and grandchildren will eventually inherit your estate? But even though they’re now adults, you may not want to leave your children all your assets outright. Consider these factors first:
Are you comfortable distributing your estate outright to your children?
If substantial assets are involved, you may want to set up trusts to distribute the assets gradually, perhaps in thirds when each child reaches age 25, 30, and 35. You can always give the trustee discretion to make early distributions for items you deem appropriate, such as to pay for college, to start a business, or to purchase a home.
Have you carefully selected a trustee?
If trusts are involved, you want to select a trustee who is impartial and who will be fair to all your children. Carefully consider whether you want to make one of your adult children the trustee. That can cause disagreements between siblings if one sibling is in a position to decide what happens to another sibling’s inheritance.
Have you considered the consequences of a child divorcing?
You probably don’t want to see some of your assets distributed to an ex-daughter- or son-in-law. You may need to place special provisions in a trust to ensure that doesn’t happen.
Have you carefully considered how assets are distributed between your children?
Maybe one of your children is very well off financially, while the others have not done as well. Do you divide your assets equally or provide less to the child who is well off financially? Make sure to consider this decision carefully. Children often feel they deserve an equal share of their parents’ estate, even if they have a substantial estate of their own. If you decide that unequal distributions make more sense, be sure to explain why, either personally or in a letter. That will hopefully prevent hurt feelings or disagreements among siblings.
Do you need to make special distributions to even out inheritances?
Perhaps you have some children who you’ve paid all college expenses for, while other children have not gone to college yet. You may want to ensure that all children receive a college education and then distribute the rest of your estate equally among your children.
Do you need to coordinate your estate plans with your children’s estate plans?
If you have children who have their own substantial estates, it may not make sense to leave additional assets to them. Perhaps they would prefer that those assets be distributed directly to their children, to help minimize family estate taxes.
Have you emphasized the need for estate planning to your children?
Especially if you are leaving a substantial estate to your children, your children need to plan their own estates. Your role is not to dictate what they should do with their estate, but to gently remind them of the reasons why they need an estate plan. After major life events, such as marriage, divorce, or a child’s birth, remind your child to review their estate plan.