While there are a variety of reasons you should periodically review your estate plan to determine if changes are necessary (or to create one if you do not already have one in place), sometimes it is the less obvious factors that play an important role in helping you decide when to tackle this task:
Tailor Your Plan to Help Motivate Your Children: When your children are young, it is common to treat all of them equally since it is unclear which path each of them will choose. However, treating your children equally is not necessarily treating them fairly.
For example, imagine two children (Jason and Chloe) both raised in the same loving home, attending the same school through high school and given the same level of support and encouragement. They may end up being very similar in terms of the path they choose. However, they may also end up being two drastically different children who are motivated by very different things.
- Chloe is very self-reliant, responsible and motivated to carve out her own path in life with a goal of a career she loves and a loving family to support her. Offering Chloe access to her inheritance at an earlier age may accelerate her attainment of these goals and serve to motivate her to work even harder.
- On the other hand, Jason is less inclined to follow the traditional career path and is not as focused on educational/career goals as his parents would prefer. Therefore, Jason requires additional incentives to achieve the milestones expected of him. Holding Jason’s inheritance in trust until later in his life or until he achieves a set of well-defined goals that is valued by his parents is a great way to motivate Jason by offering him a reward for working hard. Using this carrot may help Jason realize his full potential in the eyes of his parents.
- While your children may not be as different as Jason and Chloe, treating them the same may end up unintentionally hurting one of them. Creating attainable goals for an unmotivated child to achieve and rewarding such hard work may help bring out a child’s best effort and help the child mature into a responsible adult capable of managing his/her own finances.
Beneficiaries with Addiction Issues: Unfortunately, many families have members who develop addiction issues later in life (drugs, alcohol, gambling). Leaving money outright to such an individual can have dire consequences. The use of a wholly discretionary trust can provide ongoing support for the child without any of the potentially disastrous effects of leaving money to the child outright. Requiring drug tests or other proof of sobriety will enable a Trustee to monitor a child’s behavior to ensure that money is only distributed when it is appropriate. Additionally, enabling a Trustee to distribute money directly to those providing support to a troubled child i.e. physicians, counselors, etc., is a great way to use the child’s inheritance to provide the proper ongoing support for the addiction battle the child is facing.
Thwarting Family Vultures: Death sometimes brings out the worst in people, especially if a family member or friend feels “entitled” to receiving extra compensation for all of the time, energy and effort spent taking care of the recently deceased. However, this self-help method to a decedent’s personal belongings is actually a crime (theft). A few simple steps should be made to limit sentimental or other valuable personal items from “disappearing” into the pockets of family, friends or anyone else with access to a deceased individual’s home after his/her death.
- Make a detailed list of items including pictures, videos or a spreadsheet;
- Have a discussion with beneficiaries about what items they may want to limit arguments or outright theft of these items; and
- Provide a copy of your list of personal items to your attorney, successor trustee and at least one trusted heir (if possible) to ensure that these items will all be accounted for and distributed pursuant to your wishes.
No matter what stage in life you currently find yourself, it is more than likely that it is time for you to review your estate plan to determine what, if any, new issues need to be addressed to properly handle your family’s current situation. Contact us to discuss what the next step is to ensuring that you have provided for your family’s future properly.