If you have children, you have likely tried to treat your children equally and not play favorites. When it comes to deciding how to distribute your estate, however, an equal distribution may be problematic. When your children are young, there are no extenuating circumstances to consider which makes decisions regarding the distribution of assets within your estate plan much easier. Once they are adults, however, things may become more complicated, and you may have concerns about distributing assets equally among your adult children. An Indianapolis estate planning attorney at Frank & Kraft discusses what to do if you are considering an unequal division of your estate assets among your children.
Why Might You Be Concerned about an Equal Division?
You may have several legitimate reasons for being concerned about an equal division of your assets that have nothing to do with favoritism. Most of those reasons are likely based on concerns how the inheritance you leave to a child will be managed. For example, you may be hesitant to leave a sizeable inheritance to an adult child because:
- You suspect (or know) that your child has an addiction. A substance abuse, gambling, or shopping addiction should be of concern when contemplating the inheritance you pass down to a child. Failing to address the reality of your child’s addiction could result in your child spending his/her inheritance on that addiction within a very short time after receiving it.
- Your child has a mental health issue. If your child suffers from a mental health issue, successfully managing an inheritance may be expecting too much. If your child has special needs, receiving an inheritance could also jeopardize his/her eligibility for much needed state and federal assistance programs such as Medicaid and SSI.
- You are concerned about the influence of a spouse. If your child is married, your son or daughter-in-law may be the source of your concern if he/she is particularly controlling and/or if it appears that the couple is headed for divorce. The assets you leave your child could end up indirectly in the hands of a spouse while married or directly awarded to the spouse in a divorce.
- Your child is a spendthrift. Most families have a spendthrift – that person who simply doesn’t handle money well. If one of your adult children is a spendthrift, it creates a problem when it comes time to pass down an inheritance. A beneficiary who does not handle money well is almost certain to squander the money in record time.
How Can a Trust Help?
No parent wants to treat their children differently; however, no parent wants the inheritance they pass down to be wasted either. The good news is that creating a trust can help. A trust allows you to appoint a Trustee to manage the trust assets and distribute them according to your wishes as expressed in the trust terms. If you are concerned that your child will squander his/her inheritance, your trust terms could specify that trust assets are only to be used to pay for things such as education, medical, or housing expenses. In addition, assets held in the right type of trust are not actually owned by your child, meaning they cannot be lost to a spouse in a divorce. Using a trust allows you to divide your estate equally among your children without having to worry that the assets will be lost or squandered, providing a relatively simple solution to a complex problem. Even better, the same trust you create when your children are young can likely be modified to distribute your estate to all of them when they are adults.
Contact an Indianapolis Estate Planning Attorney
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about estate planning, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.