When children are young, estate planning for parents normally focuses on providing for their upbringing. After they grow up, parents normally want to continue providing for them in their estate plans, but the focus tends to shift a bit.
If you have more than one child, and you plan for them to inherit your estate, you may wonder how to divide your assets. To help decide how to divide your estate, consider these issues:
Are you comfortable distributing property to your children outright?
If substantial assets are involved, you may want to set up trusts to distribute to them gradually, or even set conditions for the distribution. For example, you might want the property to be given in thirds when each child reaches age 21, 25, and 30. You can always give the trustee discretion to make early distributions for expenses that you deem appropriate, such as paying for college, starting a business, or purchasing a home.
Have you carefully chosen a trustee?
When trusts are involved, you want to select a trustee who will be impartial and 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 carefully considered how assets are distributed between your children?
Perhaps one of your children is very well off financially, while the others have not done as well. You may want to divide your assets equally, or you may decide to provide less to the affluent child. 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.
Have you considered the consequences of a child divorcing?
You probably wouldn’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.
Do you want to make special distributions to even out inheritances?
Perhaps you paid all college expenses for some children, while other children have not gone to college yet. You may want to ensure a college education for everyone and then distribute the rest of your estate equally among your children.
Should you coordinate your estate plan with your children’s estate plans?
If you have children with their own substantial estates, it may not make sense to leave additional assets to them. Perhaps they would prefer that any inheritances be distributed directly to their children, to help minimize family estate taxes.
Michael Robinson, Estate Planning Attorney
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