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, so we may treat them differently. (Remember, there’s really no birthright.
We could leave everything 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 leaving him one-third of their estate, his parents might establish special-needs provisions, authorizing a trustee to pay for some of “A’s needs, subject to court approval, without giving “A” direct access to enough funds to render him ineligible for his benefits.
• Daughter “B,” age 33, is independently wealthy, is married to a multi-millionaire and does not intend to have children. Shall her parents leave her an equal share? Instead, this share might better be applied to the needs of Son “C,” age 36, a widower with three young children, who is currently unemployed, a victim of corporate downsizing.
When should a beneficiary receive his/her inheritance? Some young people are intellectually or emotionally unready to inherit at 21 or 25. (If they received $100,000, it would be gone in a month.) In such a case, postponement of possession may be built into a living trust. For example, we can give the successor trustee the discretion to pay out income and principal 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. You may contact him at 661-255-1001.