Don’t Fall Into These Common Inheritance Pitfalls
[This is the first in a 3-part series on Inheritance Pitfalls and how to avoid them.]
Most of us know someone who isn’t talking to a relative because of an issue with inheritance. As a parent doing estate planning, the last thing you want is for your children to be fighting after your death. But how do you prevent this? There are numerous inheritance pitfalls that you could inadvertently fall into, even when you are trying to do the right thing. Here are a couple of examples, and some thoughts on how to avoid them.
For the past five years your daughter has been caring for you after you became disabled. She moved into the house, cut back on her outside work, and has devoted her time and energy to you. For this, you would like to leave her the family home, but you also have two sons. What do you do?
It is certainly understandable that you would want to leave something extra to your caregiver daughter, but you also don’t want your other children to feel hurt or left out. One option is to provide your daughter with a lifetime gift for services rendered (either as cash, or as the deed to the house, reserving a life estate for yourself), and explain this to your other family members so there will be no surprises after your death. Another option is to arrange for an additional bequest for your daughter which would pass outside of the Will (for example, a joint account where your daughter is the sole beneficiary) as well as a Will leaving the remainder of your estate in equal shares to all of your children. These types of bequests are less glaring to the other family members. A letter or conversation with all involved explaining the reasoning is always helpful in reducing family tensions. Transparency is always best.
You have two children to whom you want to leave your estate. The older one is good at managing money. The younger one can’t stay away from the racetrack where he (mostly unsuccessfully) bets on horses. What do you do?
This is a great situation in which to consider setting up a trust. A trust can protect your younger child’s money, and ensure that he doesn’t spend uncontrollably. You’ll have to choose a trustee to manage it – it should be someone you trust, but not the other sibling. Choose as a trustee someone who likes your son, has good judgment, and who will reasonably distribute trust income and principal to the beneficiary. Concerned about offending your younger son? Create a trust for both children. Be sure, however, to notify them about this. Surprises are never good in this context.
As experienced estate attorneys, we can help you set up a Will or trust that will best serve your particular needs, and ensure that your estate is settled the way you want it to be. We can help. We are only a phone call or e-mail away.
Stay tuned for Part 2 of Inheritance Pitfalls and How to Avoid Them!
The information provided herein does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available here are for general informational purposes only.
