Tailoring an Estate Plan to Fit Your Family
Tailoring an Estate Plan to Fit Your Family
By Rustin Diehl
Every family is unique and good estate planning should take into account the dynamics of your family. Often, I see “boiler-plate” plans that were prepared from a template and they completely miss planning for the individual family. Even worse, I see planning where the client is never asked and has never thought about a number of very important family considerations. In this article I will bring up a few of the most important issues that your plan should address.
Disability and Health Issues
Your estate plan should not only address the possibility of your own disability, but it also should take into consideration any of your family members who have or may have a disability. Imagine if you left your disabled child or grandchild a sum of money or interest in real estate, and rather than blessing his or her life, the inheritance disqualified them from government benefits for disability. What could have been a wonderful legacy would turn into a mess which could have been prevented by a good estate plan which includes special needs or supplemental needs provisions for the beneficiaries.
Family Fights
Sadly, family fights over inheritance money are common. Still, very few people think that it will happen to them. Poorly conceived and executed estate planning is one of the biggest causes of fighting. When reviewing estate plans, I look for the following “red flags” which can cause bickering—or worse:
Poorly chosen executors and trustees;
Too many people trying to execute a plan;
Plans where assets are not properly titled; or
Plans with assets titled in the name of just one beneficiary under the expectation they will pass it to the other children.
All of these scenarios can lead to family litigation or probate. Fortunately, nearly all of these problems can be prevented by reviewing and improving your estate plan and adding a “No Contest” provision to deter fights.
Irresponsible Beneficiaries
Unfortunately, most families have at least one wayward child. I frequently meet with clients who are struggling to help a child to improve work ethic, gain financial independence, or deal with substance abuse issues. They wonder how to appropriately plan for such children. Fortunately, some estate planning options give a troubled person a “push in the right direction.” For instance, incentive trusts release money based on responsible activity and offer an effective way to assure clients that the money they leave will be a legacy of love to their family.
Multiple Marriage Concerns
Many couples are in their second marriage with “mixed families” of children from multiple marriages. Often, they are concerned that if a spouse inherits everything, their own children might be disinherited. In fact, this is a valid concern and often does happen accidentally. It is critical that people in second marriages implement a well-designed plan with built-in provisions which will ensure that both sets of children receive the legacy that their parent wanted them to have.
When preparing your estate plan, it is wise to consider how your family dynamics will impact your plan. Choose legal counsel that asks the right questions and has the right answers. Planning well for your individual family can prevent heartache and mistakes and make the difference between leaving your family a mess to deal with and blessing your loved ones with a legacy.