The majority of parents want to treat their children fairly in life. They understand that each child needs individualized, not identical teaching. They know that being equal with their children is actually not fair and may have negative consequences. However, some parents forget this principle when they develop their estate plan and believe that equal distributions is only fair. Fairness does not have to mean you treat your children exactly the same. Your children may have unique circumstances that deserve unique attention and planning. For example, the youngest child may be significantly younger than the oldest, one child may have gainful-but low income-employment, a child may not handle money well, or another may not be able to take care of himself or herself because of a disability. Another situation may involve a family business and some children are involved in the running of the business, while other children are not. Giving equal distributions to all children in these situations does not make sense, could hurt feelings, and could even be harmful.
Fair Estate Planning is Individual, not Equal
You can not only decide what to give to your children, but also when and how to give that property. Not all children should receive their inheritances in a lump sum all at once, but rather should receive the assets in installments. Other children may need incentives to motivate them to reach their potential, with some distributions as a reward. Some parents may feel the need to decide to insert some good behavior requirements (such as passing a drug test) before the child can receive any distributions. An older and responsible child may be ready for an outright distribution, while a child in college may not be ready for a large lump sum. Each of your children is different and has unique life circumstances. It makes sense that fair distributions, rather than equal and identical distributions, are the best strategy to continue your parenting style.
Trust-Based Planning
Leaving assets in a trust is a powerful option for parents. A trust allows you to have great control over the ‘when’ and ‘how’ of asset distributions. Trusts not only give you that control, but they protect your property and your children from debts, divorce, manipulative people, bad spending habits, and other potential problems. Trusts really empower your estate planning goals, fulfill your wishes, and continue your parenting style.
Preparatory Option
If it is possible one option to think about is give your children a small part of their inheritance. This will allow you to see how they react to a decent sum of money. You can then personalize your distributions to them according to their life situations and their demonstrated ability to handle money. Additionally, if your child does use the gift well, such as to pay through college or buy a home, you get to see and experience those moments with them.
Good Estate Planning Meets All Your Goals
Many parents feel that they are stuck between a rock and a hard place. They want to give their children enough property to help them in life, but are worried that their children may not reach their full potential. Some confused fair treatment with equal treatment. Estate planning can help with this. By controlling the ‘when’ and the ‘how’ through effective strategies, you can give your children what they need but do so in a way that encourages them to be their best selves. Your estate plan can have positive consequences that last years or even generations.