How may we best protect our families, while allocating our resources sensibly? By carefully considering the needs of our families, we find our answers and earn some peace of mind in the process.
Who should inherit our assets when we die? We love our children equally, but they really are not equal: they have different needs, aptitudes, abilities, ages, opportunities, experiences and limitations. It’s alright to treat them differently, if the situation so requires. In fact, there’s really no birthright. We could leave everything we have to the proverbial dog and cat Hospital. But we do want to provide for our children, sensibly, protectively and lovingly. For example:
• Clients Joe and Josephine have three loving, attentive children. Son “A”, age 30, has a chronic disability. He can’t work. He receives Medi-Cal benefits, which he would lose if he were to receive a large inheritance. Rather than simply leave him one-third of their estate, his parents may consider establishing a trust with special-needs provisions, giving a trustee discretion to make periodic payments for whatever “A” requires or wants, without giving direct access to enough funds to render him ineligible for his benefits.
• Daughter “B”, age 33, is independently wealthy, having won the lottery. She has a high-paying career, is married to a multi-millionaire and does not intend to have children. Shall her parents leave her an equal share? Instead, this share may be more effectively applied to the needs of Son “C”, age 36, a widower with three young children, who is currently unemployed, a victim of corporate downsizing.
Then there’s the question of when the beneficiary should receive an inheritance. Not all young people would be intellectually or emotionally ready to inherit at ages 21 or 25. As one client described his son, “I love him dearly, but if he got his hands on $100,000, it would be gone in two months.” In such a case, postponement of possession may be built into a living trust and other estate planning documents. For example, we can give the successor trustee the discretion to pay out income and principle for the beneficiary’s health, education and support, after taking into account the beneficiary’s other known resources and then turn over the balance of funds in increments when the beneficiary is older and presumably more mature.
Taking the time to consider the needs and circumstances of our children is an act of love and kindness. Creating legal structures to best serve their needs may be the kindest act of all.
Jerry Kessler practices law in Santa Clarita. For further information about living trusts, wills and probate, you may call him at 661-255-1001 for a confidential consultation.