If you are like most people, one of the primary reasons for creating an estate plan is so that you are able to decide how your estate assets are distributed when you die instead of letting the state make that decision by dying intestate. If you are a parent, you probably plan to leave some, if not all, of your estate to your children. One question that many parents wrestle with, however, is whether they should split their estate equally among their children. Many parents feel obligated to create an equal split in their estate plan, despite having reservations about whether that is really the best idea. Ultimately, only you can decide how your estate is divided within your estate plan; however, before you make that decision you may wish to read the following and consider your options.
Why Might You Not Want to Split Your Estate Equally?
If you are hesitant to create an equal split among your children within your estate plan, there is undoubtedly a reason for your hesitation – and it is probably not because you favor one child over the others. Instead, your hesitation likely stems from a legitimate concern over what will happen to the inheritance you leave to one of your children. This concern may be for one of several common reasons, such as:
- Substance abuse, gambling, shopping addiction – as a parent, you may not want to admit that your child has an addiction; however, failing to admit the truth in this case could result in your child spending his/her inheritance on that addiction within a very short time after receiving it.
- Mental health issue – if your child suffers from a mental health issue, managing an inheritance may be asking a lot. 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.
- Spendthrift – almost every family has one – that one person who simply doesn’t handle money well. Handing a spendthrift an inheritance is often akin to flushing the assets down the toilet.
- Spouse – a spouse can be an issue of he/she is particularly controlling and/or if it appears that the couple is headed for divorce where your hard-earned assets could be awarded to the spouse.
Are You Obligated to Divide Your Estate Equally?
When you consider how to handle the division of your assets, you probably feel obligated to split your estate equally among your children. After all, distributing your estate any other way is like admitting that you have a favorite, right? It may feel that way to you; however, if you have a valid concern about handing one of your children a large sum of money you certainly have a right to protect what you worked and saved to accumulate. The same is true if you are concerned that a spouse might end up with your assets instead of your child.
Is There a Solution?
Many people in your position choose to resolve the issue by creating a trust to hold one child’s share of the estate. In fact, you could use the trust for all of your children. 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 a 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.
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns about how to divide your estate among your children, or about how to create a trust, contact the experienced Massachusetts estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.