Multiple children can complicate your estate planning. If you have children at different levels of maturity, you should take that into account when making a last will and testament or revocable living trust. Keep in mind the law does not require you treat your children identically. It is okay to make certain provisions for one child but not the other.
Keeping an Inheritance in Trust
It is a common estate planning practice to give part (or all) of your estate to a trustee who can manage your assets for the benefit of your children. Such a trust can be structured to allow the trustee to spend any necessary funds for your child’s health, education, and maintenance. The child would then be entitled to distributions of the trust’s principal at a certain age. This can even be done in multiple stages. For example, you could specify a child will receive one-third of her inheritance when she turns 21, another third when she turns 25, and the remainder when she turns 30.
It may also make sense to only keep funds for some children in trust. Let’s say you have two children. The older child is an adult who has already graduated from college. The other child is still in high school. It makes sense to keep funds in trust for the younger child to ensure his college education is paid for, but such arrangements are unnecessary for the older child. In this scenario, you might opt to leave your older child an outright bequest in your will while maintaining a trust solely for the benefit of the younger child.
Special Circumstances
There are other cases in which a particular child’s situation may require special estate planning provisions. If you have a child who has a history of poor financial management or has incurred a great deal of personal debt, you might consider what is known as a spendthrift trust. This is basically a trust where the beneficiary cannot access the principal. The trustee can only make limited payments to the child per your instructions. This arrangement can prevent your child from squandering his inheritance, as well as keep any of your child’s creditors away from the trust principal.
Another unique situation is a child who receives government benefits due to a disability. Leaving an inheritance to the child outright may affect her eligibility. To work around this problem, you can leave property to a special needs trust. In this type of trust, the trustee can spend funds for the benefit of your child, but your child is not considered the owner of the trust principal.
Get Advice from a California Estate Planning Attorney
Every estate planning situation is unique. That is why it is important to speak with a San Diego estate planning lawyer who can fully apprise you of all of your options in providing for your children and other family members. Contact the Law Office of Scott C. Soady to speak with an attorney today.