5 Estate Planning Potholes to Avoid
Many people believe that they should leave their assets to their children equally. In some cases, it works, but there are some where it doesn’t. Consider each child individually and plan to give them what they need. As the song goes, “You don’t always get what you want, but sometimes, you get what you need”!
Here are some common pitfalls we see:
1 – Giving real estate to one child and money to another, even if they are of equal value at the time you put your plan in place, it may not be equal at the time you pass. If long-term healthcare expenses reduce the money available at your death, or if the value of the real estate increases, then the value of the distributions will not be equal. Instead, we recommend wording distributions as equal percentages of the remaining estate. That way, regardless of what is left, your intent of equal distributions will be realized.
2 – Giving assets to a child who is a spender or perhaps has substantial debt from credit cards or loans, may result in the inheritance . Planning ahead can help your spender better handle their share, so, for instance, they have a pension-like distribution that provides a reliable source of monthly income for the rest of their lives.
3 – Blended families often have dynamics that must be considered in your estate planning. Laying out your wishes in advance can help smooth over some of the squabbles that inevitably arise.
4 – If you have a special needs child, your plan must consider any public benefits they receive. Failing to plan properly, can actually cause them to be ineligible for benefits.. Make sure that your attorney is experienced and up to date about how these programs work and how your distribution to them should be structured so that benefits are not disrupted
5 – If you have helped out one child financially during your life, the other children who did not receive assistance may become resentful. A customized estate plan can be designed to address these issues as you desire and equalize distributions if need be.
What will work for you? That depends entirely on your unique situation. Work with a trained, experienced estate planning/elder law attorney who can give you options that address your concerns. Try to be as objective as you can about the challenges your family faces when you are gone and describe them clearly to your attorney. Plan now – if you become incapacitated, you may not be able to plan.
Learn more by attending a free estate planning workshop where you will learn how trusts and other strategies can save you taxes, avoid probate, and deal with family problems. Learn more at www.cooperadelvu.com/workshops