Have you ever given any thought as to how you will pass your financial wealth to your children? Responsible provisions can be built into your living trust to protect your children and their inheritance, no matter how modest or how abundant your wealth might be. Keep in mind that most wealth in this country is lost between one or two generations because people simply don’t take the time to learn how to best pass on their wealth.
When creating an estate plan, most parents have to decide how and when their children should inherit from them. In most cases, each child receives an equal share. In some cases, distributions can be deferred to certain ages – for example, one-third at 25, one-third at 30 and the balance at 35. Some parents also allow other distributions to their children in addition to age-based distributions. For example, additional distributions can be made for a child’s health, education, or support of some kind. These kinds of distributions are usually governed by the living trust – the main component of most estate plans.
In some living trusts, we will build in special language that allows the trustee to withhold distributions to a child, even when an age-based distribution comes due. For example, if a child is a spendthrift and is unable to manage money, hanging out with the wrong crowd, etc., the trustee can withhold distributions. In some cases, there may be looming trouble with creditors or perhaps a divorce on the horizon. In some cases, distributions are made to kids who then file for divorce a few years later. Guess who often takes half of that inheritance during the divorce? That’s right – an ex-son-in-law or ex-daughter-in-law. In some cases, children should not inherit if they have substance abuse problems such as alcoholism or other drug problem. Finally, in some cases, distributions to a child may not be prudent if that child has special needs (autism or other disability).
To design a plan to protect your assets and your children, consider a consultation with an estate-planning attorney. For those without a plan, a consultation with me is free of charge. I also handle personal injury cases as well. Visit my new website at www.MansourLaw.com and my personal injury website at www.ValenciaLawyer.com.
For more information, please call 661-414-7100.