Young children in the family offer powerful motivation for parents to put an estate plan in place. It’s imperative to ensure growing young ones will be taken care of by the desired guardian in the event of a parent’s premature passing, and it’s important that the guardian have access to the funds to “launch” the child in place of the deceased parent.
How you and your spouse structure an estate plan when your children are young will be much different from how you’d like your estate handled when they are grown. By the time they’ve earned their college diploma, it’s time to take another look at how you’d like your assets handled. You now have adult children, and your estate plan should reflect these changed circumstances.
Is Your Adult Child Ready for a Full Inheritance?
Your son or daughter is no longer two years old, but just because they’re 22 doesn’t mean they are ready to accept a full inheritance, no holds barred. Even if they are much more responsible than their peers, or maybe than they were when they were 16 just a few years ago, as their parent, it’s still your responsibility to look out for their best interests. If you bequeath them a large inheritance before they have learned how to manage money and plan for the future, will it do for them what you want? If they receive a large inheritance in the middle of an ugly divorce, will half go to their departing spouse? If you’re worried about a dependency on substances or a gambling problem, should you appoint another party guardian of the funds? What if your child is simply prone to spending, and you’re wary of imparting your estate fully before they’ve worked to earn their own assets?
On the other hand, post-college, your adult children could be about to enter the phase of their lives when an inheritance could be the most helpful to them- putting a down payment on their first house, paying for graduate school, starting a family...
These questions, and how to approach the various balances you will need to strike, are best asked and answered with the assistance of a lawyer who has experience setting up sensible, tailored estate plans based on estate size, parental concerns and best interests of their children, no matter their age.
Have Your Needs Changed After College is Finished?
For many families, the ability to ensure that their children's education is paid for is a key goal in their planning process. Once they have graduated, you may be in a position to rethink your goals. This includes perhaps reducing the amount of life insurance you carry and pay for. It may also mean that you are ready to place some assets out of your reach, to protect those assets for your children and against the costs of nursing home care. You also may be rethinking your durable power of attorney or health care proxy, if you think your children are ready to assume those roles for you and your spouse.
Who Is Your Personal Representative?
A young parent may have appointed their adult brother or sister as their personal representative, but once their children reach adulthood, they may want to make a switch, especially if their siblings are no longer in the best of health. Adult children are often appointed power of attorney or health care proxy, given the parental trust that the child will know their wishes and act accordingly.
Who Should Receive the Family Home?
Just because you have multiple children does not mean you want them all to split your assets equally. If one child moves out of state and has no desire to come back, maybe you should leave the family home to the child who loves living in their hometown, but gift more liquid assets to the other. You should also consider the financial standing of each child. Maybe one has grown a successful company, but the other has less financial security. As a parent, you are allowed to allocate your assets however you wish.
What About Grandchildren?
Back when you formed an estate plan when your children were young, grandchildren might have seemed like a distant prospect. Now that your children are older, you can’t wait for it to become a reality! While you work on a current estate plan, ask your lawyer about how to set up trusts to account for grandchildren than may enter the picture.
It’s not enough to just create a general estate plan. You need an estate plan customized to your family – your life, even as your needs change over the years Set up a consultation with slnlaw today and let’s get started.