When you die, how will your assets be imparted to your children? What if the kids aren’t old enough or mature enough to handle their inheritance after you pass? If you have more than one child, how will your assets be divided? What happens to your legacy, if the children inheriting your wealth die?

These and other issues should be carefully considered to ensure your wishes are carried out and your children and the assets you are leaving behind are protected.

Estate Planning

For children less than 18 years of age, look at putting your assets in a trust that is administered by a trusted guardian or qualified conservator of your choosing. Even when your child reaches his or her majority, you can designate in advance how and when the money and other assets may be doled out to more effectively help your offspring handle their inheritance.

Also, consider establishing a Lifetime Trust, which can conserve assets and act as liability protection for your children. A trustee you assign would have control of how monies would be distributed. Once the kids take money from the trust, it becomes subject to creditors or any future divorce. Further, if you have a child with some kind of addiction, such as with drugs, alcohol or gambling, a Lifetime Trust can serve as a governor on how the assets are taken.

Even if your kids are responsible and you believe they can handle their own finances, you might want to disperse the money in chunks over time to help them better manage their new-found “wealth.” Often, this is defined in the estate trust by the age of the surviving child. For instance, you could decide to have the trust release some of the funds at age 25, more at age 30, and the rest at a later birthday.

If you have more than one child, think about dividing the trust into equal shares for each recipient. In this way, the kids have their own assets to do with what they desire, which is much more equitable and may save future disagreements among the siblings.

So, you’ve laid out the trust to allocated assets to your children after your death, but what happens if there are assets remaining in the trust and your child dies? One thing that can be done in advance is to set up a “powers of appointment” within your trust. This can authorize your children to alter your original trust agreement after you are gone to pass along any assets to their children.

Planning ahead can seem overwhelming, but your professional advisors can provide the guidance you need. If you have questions on how we can help you and yours, contact Terri Hilliard PC at 805-201-2552 or e-mail cleintcare@terrihilliard.com.

Image courtesy Alpha Stock Images.