New York Estate Planning & Elder Law Blog
According to some estimates, the Baby Boomer generation will leave over $30 billion to their children in their wills over the next thirty to forty years. When leaving an inheritance for minor or adult children sometimes personal, professional, or financial issues can flare up and complicate the process. If you wish to leave your estate to your children here are five simple steps that will ease any conflicts in the planning.
· Use open communication to manage expectations
Talk to your children about what to expect from the estate. Recent surveys have found that children often undervalue their parents’ estates by over $100,000. Letting your children know where you stand financially and what they should reasonably expect resolves a lot of conflicts before they even begin. You should also communicate about how their expectations should change because of economic downturns, long-term medical care, or other unexpected issues.
· Create a level playing field
Creating a level playing field does not necessarily mean that you must distribute all assets equally. This can also apply to the distribution of responsibilities when it comes to settling your affairs. When your children feel included in the process it makes them feel like they are worthy, capable, and trusted by you. Getting everyone involved can minimize fighting over aspects of your estate.
· Distribute assets yourself
One common issue that causes problems between children occurs when assumptions are made about asset distribution. A lot of parents will name one child as the beneficiary of a life insurance policy or other account and simply expect that child to equally distribute the money to the rest of his siblings. To avoid any potential issues, name all children as the beneficiaries to the accounts that you wish them to share.
· If distributing unequally, explain why
The largest issues often come from inequality in asset distribution. Children fight when one gets more than others. Oftentimes, parents have good reasons for allocating more of the estate to one or more children. One child may make more money, another may need more for schooling or special needs, or a variety other logical reasons for unequal distribution. The easiest way to resolve this issue is to simply explain why. Because parents often feel uneasy about having these kinds of talks with their children, another option is to leave a note with the will or address it in your estate planning documents.
· Eliminate uncertainty by placing the estate in a trust
A lot of attorneys who specialize in estate planning suggest distributing estate assets to children in chunks, particularly if the children inheriting the estate are at a younger age. The logic of this is that children will make more mature financial decisions as they age. One simple way to control when and how your children receive their inheritance from your estate is by putting your estate in a trust. In addition to placing specifications about when and how distributions should be made, many other types of provisions can be written into a trust. It can ensure that your children will make wise and prudent decisions about the inheritance that you provide.