Would you like to provide a final gift to your children by leaving them an inheritance? There is a great peace of mind that accompanies a finely tuned and properly executed plan that can protect what you have for your children and future generations.
Maybe you are taking the advice of some who advocate spending your children’s inheritance while you can. While that may be true today, I am confident that you would rather leave what you have when you are gone to your children rather than to the government, lawyers, courts and others that you would have never selected if you had the choice.
There are a number of complications that can arise when leaving assets to your children. Effective planning can resolve those complications and ensure your legacy is intentional and that your wishes are carried out as expected.
If you have young children, it is imperative that you have an estate plan. If you die before your children reach the age of 18 and you do not have the proper people and planning documents in place, a judge will determine who will raise your children until they reach 18 years old. A judge will determine who will control any financial assets that your children were supposed to receive from you when you died and all of these court decisions are made without your input as to who will receive your assets and if applicable, how your children are raised including where they will live and who they will live with.
Do you have children that that are, were, or may become married? There are additional considerations to be made because many marriages end in divorce. You need to take action to protect your children’s inheritance from their past or future divorces. While many people are aware that divorce rates have risen dramatically in the past decades, many people do not know or think about how inherited assets may be divided in the event that your children inherit and then subsequently get divorced. Your child may have to share that inheritance with their ex-spouse unless the proper planning is in place.
If you have children from a prior marriage, estate planning accomplishes significant protections. It is common for children to get nothing due to a step- parent receiving all of the assets.
For example: Charles had two children in a prior marriage with First Wife. Charles divorced First Wife and later married Wife Two. Everything that Charles had went to Wife Two when he died and nothing went to his two children from his marriage with First Wife. When Wife Two died, she left all of her assets (including what she received from Charles) to her children and Charles’ original two children never received an inheritance at all.
Proper estate planning achieves protection from these problems. Charles could have arranged a comprehensive estate plan that ensured Wife Two was provided for but that assets were also protected and passed to his two children from his first marriage.
A comprehensive and customized estate plan can protect your children:
· From Guardianship problems and proceedings. If your children are under the age of 18, an estate plan can be arranged to avoid the court supervised guardianship proceeding by specifying who raises your children and who will be responsible for their inheritance;
· From divorce and the possibility that you may unintentionally leave your assets to your son- in-law or daughter-in-law in the situation where your children have been divorced or may get divorced in the future;
· From a second marriage potentially excluding your children from a prior marriage from inheriting.
Justin T. Crain is an estate planning attorney in the Plano, Texas office of Thomas, Walters, PLLC where he provides legal services such as Wills, Trusts, Guardianship, Probate, Estate Administration, Medicaid Planning and Nursing Home Planning to those in the surrounding areas of North Texas.