Inheritance of any size is a windfall for the children who receive it given that they most likely didn’t do anything to earn it.
Some wealthy parents don’t want their children to inherit more than a fraction of their estate out of concern that their children may not use it wisely or may develop bad habits.
Other parents may be concerned that health care costs, and the living expenses associated with living longer than past generations, may make it unlikely that the parents will have any money left to give to their children.
An estate planning lawyer can help you figure out how to provide – or not provide – for your children via lifetime gifts, beneficiary designations, Wills or Trusts.
Trusts have some advantages over Will-based estate plans in dealing with inheritance by minors, disabled persons, or by children with creditor issues, divorcing spouses or drug problems. Trusts are also especially helpful with blended family situations.
Whereas surviving spouses typically have the right to certain assets of the deceased under Minnesota law, children do not. (Note: a pre-nup or post-nup agreement could alter spousal rights, however.)
Sometimes parents desire that one or more children receive a larger inheritance than the other children. Perhaps that child worked at low pay in the family business or was an unpaid caregiver to the aging parent. In such cases, it may be wise for the parents to hold a family meeting to explain the rationale behind their estate plan choices.
In addition, the parents should consider writing a letter to all their children explaining why the unequal treatment was selected. The letter should be kept with the Will or Trust. By opening the letter at such a sensitive, emotional time as the death of a parent, the children will be reminded of the parents’ thought process.
Regardless of how the communication is pursued, it’s important that the children hear directly from the parents as to the reason for the unequal distribution. Otherwise, the children may view the unequal distribution as signaling unequal love by the parent toward them. If they feel that the parental love was unequal, the children may never speak to each other again.
Note also that unequal distributions can occur unwittingly if the parents don’t understand the different roles played by Wills, Trusts, beneficiary designations and the titling of ownership of assets. This is an area of widespread confusion. A well thought-out estate plan worked out with an estate planning lawyer should help avoid unequal distributions when such inequality is not intended.
A well thought-out estate plan may also help avoid the fighting that could occur if a house or other significant asset is inherited directly by multiple children. It’s often better that assets destined for sale be sold through the estate administration or trust administration process. That way, only the personal representative or trustee is the decision-maker, and only that person needs to handle the sale and sign the paperwork related to the sale. Avoiding the too-many-cooks-in-the-kitchen dilemma may also reduce the potential for disagreement. After the sale, the personal representative or trustee, as the case may be, may divide the net sale proceeds among the children.
Given the expenses of parents living perhaps to nearly 100, and the reasonable goals of parents to do some retirement traveling, etc., it’s increasingly likely that assets available for inheritance by children will be limited. Nonetheless, even relatively small inheritances can trigger fights that permanently break apart families.
Thus, it’s increasingly important for family peace that parents work with an estate planning lawyer to develop an estate plan that addresses their situation and goals.
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Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.
Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 firstname.lastname@example.org www.bwittenburglaw.com