Raising a family is full of numerous joys and, if we’re honest, more than a few hectic moments! But what you certainly don’t want to consider at all is a tragedy that leaves your children without their parents. However, planning ahead for their protection and care in the event of your death is exactly what a trusted estate planning attorney might recommend. In fact, they may encourage you to build a comprehensive estate plan that you can modify for a lifetime to assure your family’s well-being.
But how can you ensure that, if something happens to you, your children don’t receive their inheritance before they’re ready to manage it? Here are some solutions your estate planning legal partner may present to you.
Ways to Make Sure Children Don't Receive an Inheritance Too Soon
With a thoughtful and well-executed estate plan, you can minimize asset distribution costs and maximize the inheritance left to your heirs.
Designate Guardians
These are individuals who care for your children in case they’re minors when you die. Maybe you’ve already talked with some adults already about assuming this responsibility, but if not, have some in-depth conversations with people who are willing to do this and what it might entail. Then, your estate planning attorney can draw up documents of guardianship that activate immediately upon your passing.
Establish a Trust Fund
Trusts are some of the most frequent recommendations for securing an estate for your children. Establishing a trust fund is a legal arrangement that allows individuals to transfer assets to a trustee who manages them for the benefit of designated beneficiaries.
You also need to designate a trustee who oversees the trust and its distribution. It’s essential to choose someone who’s trustworthy, financially responsible, and has the necessary skills and experience to manage the trust. The trustee can be an individual or a corporate entity, such as a bank or a trust company.
Create Staged Distributions
One of the best ways to ensure your children don’t receive an inheritance too soon is to have it distributed iteratively—which means at regular intervals, usually of the same amount. This process prevents your heirs from being overwhelmed by a large inheritance at a young age. Your financial advisor and estate planning attorney can work out the details based on age, education needs, and other specific factors.
It’s critical to ensure the conditions set are reasonable and achievable, and allows the inheritance to be used in a responsible and meaningful way. However, you also need to evaluate the potential impact of these conditions on the beneficiaries' motivation and behavior.
Additionally, it’s crucial to communicate these conditions clearly to all beneficiaries to avoid any confusion or disputes. Start financial education early and your children will gain appropriate knowledge about proper money management and reap the benefits of your legacy for their lifetime. Hopefully, your family will never have to navigate decisions without you, but an estate plan that evolves as they grow provides peace of mind.