3 Important Tips to Consider When Adult Children are Estate Beneficiaries
Today Your Legal Corner will discuss "3 Important Tips When Adult Children Are Estate Beneficiaries."
Grandmom had a saying, which was also echoed by my father in a humorous way when it came to raising his children. It went something like this "when they are little they step on your feet and when they are big they tread on your heart." It can be certain the relationship between parent and child evokes strong emotions at every age.
To that end, estate planning requires careful consideration when addressing our adult children as estate beneficiaries. Children bring much joy for their parents throughout their lifetime. Still, as they grow, challenges happen. Important challenges to consider when creating a will with children, as estate beneficiaries are addiction, divorce and caring for an elderly parent.
Children with Addictions
Children are the center of our lives and can bring great joy. When children grow and become adults, they are not without their own faults and challenges. For example, what if your child has developed an addiction such as drugs or alcohol? To safeguard both the adult child and your estate, consider whether a trust should be utilized. When in a trust, funds can be distributed on a limited basis or delayed altogether.
As the parent/grantor of the trust, you would decide the terms of the distribution, such as how much and when, as well as following the existing rules and laws regarding trust creation.
Children with Spouses
We do love our children and sometimes even their spouse. To be honest, if we had to choose between the two, in most cases, we would understandably favor our own child, especially in the instance of a divorce. In creating an estate plan, consideration must be given to what might happen in the event of a divorce. How your estate distributes your inheritance to your child matters in the event of the child's divorce.
Let's say child and spouse have been married for 20 some years and now the spouse would like a divorce. Parent dies, leaving their child, an inheritance of several hundred thousand dollars. Should alimony be appropriate for the adult child, the amount of alimony may be diminished for lack of need as they have received a substantial inheritance, as estate beneficiaries. A trust with a designated monthly amount may lessen the likelihood of a diminished alimony award.
A second example is where the child is married and left a substantial award directly and the inheritance is comingled with joint marital funds. Should the couple divorce, the other spouse would be entitled to receive a portion of said inheritance because the funds were comingled with marital assets. A trust may be beneficial in this instance as well.
Children as Caregivers
An adult child who is a parent's caregiver who is named in the will also present a challenge when there are other children and the inheritance is not divided equally. To financially reward the child who has sacrificed and acted as your caregiver is a natural response. The challenge is to avoid a will contest from the other children so as not to have your inheritance spent in a long, drawn out court battle. Important to discuss with your attorney is the careful language that should be contained within the will to avoid or at list minimize a will contest. State the obvious in a professional manner, specifically listing whom is to receive what and why.
Remember, working with an attorney may provide added peace of mind that your assets will transfer according to your written intentions and be legally enforceable.
Till next week, God bless, keep smiling, when Your Legal Corner will discuss "Young Children and Estate Planning."
Victoria M. Dalton is an Attorney with the well-respected law firm of Hoffman DiMuzio.
Call 856-845-8243 or see hoffmandimuzio.com for further information.
Please note: Your Legal Corner was created to provide educational articles about the law and is not legal advice!