A critical part of estate planning involves identifying your beneficiaries, and specifying what they will inherit. Parents (particularly those who are widowed or divorced) often designate their children as beneficiaries. However, problems may arise among the kids depending on how those assets are divided. Examples abound, but here are just a few:
You have three children, and you specify that
A. 50 % of your estate will go to your unmarried daughter. The remaining 50% will be equally divided between your two married sons.
B. your son, who received $200,000 from you to start a business, will inherit $200,000 less than each of the other two children.
C. your two oldest children will receive their inheritances outright. However, your youngest child’s inheritance will be held in Trust, with your oldest child serving as Trustee.
You have your reasons for what you’re doing. But, if you don’t share those reasons with your kids, later on there may be hard feelings and misunderstandings about your intent. Once you’re gone, your kids are left to interpret your Will without your input. And that may lead to major problems, possibly even litigation.
So, for example,
– in A. above, your sons may think you loved your daughter more than them. After all, your sons have children to raise and put through college, and your unmarried daughter doesn’t have any of those responsibilities and she has a good job. So, in your sons’ minds, it’s obvious who you loved most!
– in B. above, the son who received the startup money may not understand your reasoning and may feel very bitter about how the assets were distributed. As far as he can tell, during your lifetime you were financially generous with the other kids too.
– in C. above, your youngest child, whose inheritance was left in Trust, may interpret your actions to mean you thought he was a “loser,” unable to manage his own affairs. He may feel that you loved and respected his older sibling who was designated Trustee more than you loved and respected him.
Conclusion:
Informing your children in advance about your decisions regarding estate distribution may help avert discord after you’re gone. Certainly, one good option is a face-to-face discussion. However, an excellent alternative is to prepare a letter that explains why you’ve chosen to pass on your estate in your particular way. The point is to clearly communicate your thoughts so that your children aren’t left guessing, and, possibly, fighting in court for years!
Getting Legal Help:
Experienced Estate Planning Attorney, Elga A. Goodman, can help you with all your estate planning needs. Contact us today at 973-841-5111.
Posted in: Estate Planning, New York Estate Planning, Trusts, Wills