Planning for your children’s inheritance is important. While it may be hard or painful to think about your mortality, it is critical to consider their safety and well-being if you have young children. However, it is equally vital to consider when your children will inherit as it is what they will receive.
A person achieves adulthood when they reach the age of 18. So, unless you make particular plans, your children can inherit any money, property, or other assets from your estate once they reach this age of majority. However, an 18-year-old receiving a large sum of money may not be what all parents desire. For example, you may have conditions you would like your children to meet before they inherit money. Or you may want assets used for your children when they’re still minors, but only for certain purposes.
Here’s the rub: There is no “right” answer to when children should get their inheritance. Every family dynamic is unique, and there are many considerations when determining the answer to this frequently asked question. Thankfully, an experienced estate planning attorney will guide you through the various considerations and advise you based on your family dynamic and what you want your legacy to look like. Informing clients is important to us, so we want to provide insight into how parents and their attorneys determine when the children will get their inheritance. Even if you don’t have children, these considerations are helpful when planning gifts for all potential beneficiaries.
The “Who” Question: Every beneficiary has a personal profile that will more or less influence how they handle receiving an inheritance.
- Who is the beneficiary? What is their personality, their interests? These factors may influence what they do with the money.
- How old is the beneficiary? Are they mature enough yet? Whether they are one, twenty-one or fifty-one will make a difference when considering when to give them an inheritance.
- What is their familiarity or background regarding finances? What is their occupation? Whether they are hopping from job to job or well-established, it will make a difference. Each of these beneficiaries is likely to approach a large inheritance differently.
The “Me” Question: Estate planning is inherently forward-looking and personal, so you have to take into account who you are and what you want.
- When will this come into effect? Is the estate plan being created by someone young and fit? Or is the estate plan for someone older or in poor health? Of course, these are not total indicators of when someone will die, but absent extraordinary circumstances, these factors may indicate how soon the terms of the plan will be implemented. This reality may impact what you think is appropriate for a beneficiary.
- What will your net worth be at the end of your life? This is not always very easy to determine (clearly, we don’t have a crystal ball), but there are some indicators of your net worth in 30, 40, 50, and 60 years. The magnitude of what is left to beneficiaries, children or otherwise, may help you figure out when or how a beneficiary should receive their inheritance.
- What’s important to you? For example, some clients don’t care if their beneficiaries blow all of their inheritance within two years. These clients think, “I’ll be dead. What do I care?” On the other hand, some clients think about how long they worked to acquire that nest egg and would hate to see it squandered and in such a short amount of time.
When it comes to deciding when your children (or other beneficiaries) get their inheritance, there is no right or wrong answer. It will ultimately depend on the beneficiary receiving the gift and what you value and want most regarding the distribution of your assets.
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We engage with clients proactively and think ahead to anticipate needs and changes as life and priorities naturally shift. The world of estate planning doesn’t have to be a mystery. Enlisting the help of an experienced estate planning attorney can make all the difference in ensuring your children benefit from your estate in the future and in the way you want. We invite you to attend one of our informative and interactive estate planning workshops to learn more. By attending, you will be entitled to a complimentary consultation with Promise Law.