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3 Ways Your Estate Plan Can Cost Your Children Money

3/1/2020

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How a Poor Estate Plan Can Cost Your Children Money

Setting up an estate plan is not always the most enjoyable activity, but it’s worth the effort because of who you’re setting it up for — often your children. With an estate plan, you can give your children a gift, and you want to leave them as many of your assets as possible. 

However, what if your estate plan is set up so that your children may receive only a portion of what you intend — or the estate might even end up costing them money? We will discuss mistakes that can lead to these unfortunate situations, and how to avoid them. 

Court Costs

Disputes over your estate or neglecting to set up an estate plan that includes a will or trust can result in the need for your assets to go through probate court for distribution. Going to court to address your estate can cost your children money in the following ways: 

  • Legal fees. If your estate needs to go to probate court, your children may need to hire lawyers to advocate for appropriate distribution of your assets. These costs will have to be paid up front, and there is no guarantee they will receive what you would have intended. 
  • Improper distribution. The distribution of your assets may be ultimately determined by the courts. As a result, you and your children have no real control over what they will receive. 

Poorly-Managed Trusts

Trusts are multifaceted and can cost your children money if they are improperly set up in regard to the following areas: management, recipients and special needs eligibility. 
​
  • Management. When your children are young, you will likely name an individual to manage your funds. This could be a spouse or another trusted adult. Be sure the management is in the right hands as your children grow older. Further, reassess trust fund management during transitions such as divorce, marriage and starting life as a blended family. 
  • Beneficiaries. Be sure your trust will be going to the proper beneficiaries. As life progresses, your beneficiaries, persons or entities you give your assets to, can change, especially in the case of blended families and divorce. Check in with your lawyer during such life changes to be sure your estate is set up as you intend. 
  • Special needs eligibility. If you have children or other beneficiaries with special needs, be sure the amount you leave to them will not interfere with their eligibility for governmental or other aid. Talk with your lawyer to be sure you can leave your children what you would like without costing them the funds they deserve. 

State Costs

Without precautionary measures, your estate can be vulnerable to taxes and seizure. Be sure to prepare your estate for the following situations. 

  • Taxes. Improperly set-up estate plans can be liable for taxes. You don’t want your children’s inheritance to be reduced because of easily-avoidable preparatory steps. Working with a lawyer can help minimize or avoid liability for federal or state taxes. 
  • Nursing home costs. If circumstances dictate that you need to live in a nursing home, your assets might be at risk because the state may use them to pay for your care if you no longer have the funds to do so. This situation could completely eliminate your remaining assets, and, as a result, your children’s inheritance. However, this situation can be avoided by working with a lawyer and setting up a specially designed Irrevocable Trust. 

Next Steps

You go through the effort of creating an estate plan so you can leave a gift to your children. Reviewing the above components of your estate plan can help ensure not only that your effort counts, but that your children easily receive your gift as you intended. 

If you would like help ensuring your children receive exactly what you plan for them to inherit, and you want to avoid costing them money, contact the lawyers at SLN Law. We will help make the estate plan process more beneficial for you and your children.
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  • Home
  • Employment Law
    • Guide To Employment Law Content
    • Advice for Employers
    • Employment Contracts in Massachusetts
    • Discrimination in the Workplace
    • Employment Termination >
      • Massachusetts Paid Family Leave
      • Severance Pay
      • Unemployment in Massachusetts
      • Should I Accept a Severance?
    • Sexual Harassment at Work >
      • Sexual Harassment in a Small Business
      • Sexual Harassment and Non Disclosure Agreements
      • Sexual Harassment and Remote Work
    • Wage and Hour Laws >
      • Overtime Law >
        • Overtime Exemptions
        • Employee Travel Time
        • Federal or State Overtime Law
      • Massachusetts Wage Act >
        • Payment of Commissions
        • Wage Deductions
        • Late Payment of Wages
        • Paid Time Off
    • Independent Contractor Law >
      • Independent Contractor Test
      • Working As Independent Contractor
      • Hiring Independent Contractors in Massachusetts
      • Is My Independent Contractor Status Legal?
    • Non Compete Agreements >
      • Are non competes enforceable
      • Massachusetts Non Compete Act
      • Pre 2018 Massachusetts Non Competes
      • Can I Avoid My Non Compete?
    • Do I Have a Case?
  • Estate Planning
    • Guide To Estate Planning Content
    • Legacy Protection
    • Why You Need an Estate Plan
    • Why You Don't Have an Estate Plan
    • Estate Planning Documents >
      • Children with Special Needs
    • Planning for Assisted Living
    • Probate Process
  • Business Law
    • Guide To Business Law Content
    • Small Business Law
    • Business Contract Basics
    • Civil Suit Defense
    • Legal Issues for Start Ups
    • Trademark Basics
    • How to Incorporate
    • Sale of Business
  • About
    • Reviews
    • Slnlaw Offices
    • slnlaw core values
    • Publications and Interviews
    • New Client Intake and Consultation
    • Contact
  • Attorneys
    • Emily Smith-Lee >
      • 2018 Lawyer of the Year
    • Jenna Ordway
    • Rebecca Rogers
    • Sharleen Tinnin
    • Elijah Bresley
  • Legal FAQs
    • Estate Planning FAQs
    • Probate FAQs
    • Small Business FAQs
    • Wage Act FAQs
    • Commission Pay FAQs
    • Overtime FAQs
    • Independent Contractor FAQs
    • Non Compete FAQs
    • Employment Discrimination FAQs
    • Employment Termination FAQs
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