The relationship between parent and child should be based on unconditional love. That being said, as parents and children age, their relationship often grows more complex and, at times, strained. Growing or grown children may struggle with personal issues or make life choices of which parents don’t approve.
When it comes to estate planning and leaving wealth to future generations, there are a number of factors that parents would be wise to consider. A comprehensive estate plan should be tailored to address an individual’s situation and accomplish intended goals. With this in mind, it’s often in the best interests of both parent and child to recognize and act according to an heir’s unique capabilities and weaknesses.
While it may be difficult or painful to admit, when making estate planning decisions, parents would be wise to take a child’s drug or dependency problems into account. The last thing any parent would likely want is for a child’s addiction to be fueled by inheritance money. A trust can be used to meter out or protect an individual’s assets until or unless certain requirements are met.
Personal problems aside, parents often want to equally distribute assets amongst children. In some cases, this makes sense. In cases where one child is extremely wealthy and another of modest means, however, it may make sense to leave more to the child who has less. Parents also sometimes fail to think rationally when it comes to naming an executor of a will or trust. For example, does naming an eldest child or only son, simply by virtue of birth order or sex make sense?
Estate planning can be complex and therefore requires the advice and assistance of a professional who can help both raise and address important considerations.
Source: Financial Planning, “Estate Plan Design: 5 Key Questions for Clients,” Tracy Craig, Oct. 24, 2013