On April 24, 2013, Jean Chatzky, AARP's Financial Ambassador reported the steps you should follow when leaving an an inheritance to your kids that can help prevent bickering and hurt feelings. She states that if you're among those leaving a tidy sum to those you love, you want to do it right. Her 5 simple suggestions are as follows:
1. Manage expectations with open communication. Parents should give kids a basic sense of where they stand financially, noting that the situation can change if more money needs to be spent on medical care. Clear instructions about whom to contact and where important papers are kept should also be known.
2. Level the playing field. One of the most frequently asked questions by anyone leaving an inheritance is whether they have to treat the kids equally. Experts say it certainly helps. That applies not just to assets but also to responsibilities for settling your affairs. Appointing responsibility makes a statement as to who is worthy, capable, and trustworthy. It's important to be concerned about people's feelings and anyone who has any level of capability should at least have a small role.
3. Do the distributing yourself. Don't name one child as the beneficiary of your life insurance policy and trust them to divvy it up among the siblings. If you want all your siblings to inherit equally, put them all down as beneficiaries. If you have jewelry, art or other items to bequeath, leave a list of who gets what, along with a method for dividing up whatever is left so that people can take turns calmly.
4. If you distribute unequally, explain yourself. There are several reasons parents do this, but it can lead to resentment. At the very least, write a note to go with the will explaining the reasons why you distributed your assets the way you did.
5. Use a trust to eliminate uncertainty. If you want to make sure your children use the money wisely, consider putting it in trust with a few strings attached. Many recommend distributing the assets in chunks (typically one-third at age 25, one-third at age 30 and one-third at age 35). The thinking is that with maturity will come better financial decision-making. You can also include a provision that if your child is going through some sort of substance abuse problem at that time, the distribution can be held to a later date.
These are all great suggestions, Bradford Miller Law can advise and direct you in matters such as this. Our experienced attorneys can help you avoid potential problems when updating or planning your estate. Give us a call so we can help you through this process at a reasonable rate. We will help you prepare all the legal documents suited to your personal situation. Visit our website for helpful information regarding Estate Planning and give us a call.
Posted by Bradford Miller Law, P.C.
Practicing in Real Estate Law, Landlord Tenant Law, and Estate Planning
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Chicago, IL 60602
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