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Estate Planning and Parenting ... When the Kids Are Adults

Fairness in distributing your assets and clarity in communicating your intentions are vital in minimizing sibling jealousy and resentment after you are gone

Many parents don't worry about estate planning for their adult children. But some parents do agonize over fairness in gifting and how to fairly distribute their assets among their kids. Fissures sometimes open up in relationships between parents and children, and we have seen instances in which parents try to use their estate planning to repair family relationships.

If you anticipate that there will be issues among your adult children with respect to your assets, you might wish to remember these suggestions.

To start this discussion, decide what you want to accomplish through estate planning before you designate the distribution of your wealth. An often unarticulated desire of parents is that their children are friendly with each other after the parents pass away. If that's important to you, take into account the consequences of your plan.

Common Issues

The harsh reality is that, if your kids don’t get along while you’re alive, your death probably won't bring them peace – especially if there’s resentment over how you distributed your estate. Consider these common issues:

  • Who’s in Charge? If there is friction among your kids, naming one of them as your successor - i.e., your trustee and/or personal representative - and omitting the others without an explanation may fan the flames of discord. At the other end of the spectrum, naming all of your children as co-trustees is generally unworkable.

Also, if you name one child as the trustee, putting them in charge of distributing assets to your other children, that can cause turmoil as well. (Would you really want your brother or sister running your financial life?) Sometimes, it makes sense to name a disinterested third party as trustee; that way, if there's any animosity, it can be directed at the third party rather than adding to the issues among family members.

  • Equal Shares? It might seem fair to you to distribute your assets based on the varying needs of your kids, to level the playing field for a child who is in a relatively low-paying occupation, versus a sibling who is more financially successful. In such cases, you can be confident that the child who receives a lesser share will be unhappy, perhaps feeling that they are being punished for their success. Similarly, if you assign disproportionate shares on the basis of how many grandchildren each of your kids has produced for you, count on that being another source of discord.

  • Bad Kids? Revenge-based estate planning is generally a bad strategy. Sometimes a parent is so disenchanted with a child that there is a desire to disinherit them. That may satisfy your immediate emotional state, but think long-term: Do you really want your disinherited child to go through life in a permanent state of resentment toward you?

It’s Your Money

Some parents think they owe their kids an inheritance. Regardless of your parenting philosophy, you need to plan - and budget - so that you can maintain control over your financial assets and independence for as long as possible. Don't impoverish yourself for your children. If you can't afford to give the kids an advance on their inheritance, don't.

Communicate with Your Kids

Talk to your kids about your estate plan. Although you need not give the details, it's worthwhile to summarize what you're doing.

If you're naming one child as trustee, be sure to ask that child's permission. Similarly, if you're not naming other children as co-trustees or personal representatives, you should give them an explanation. If you're leaving assets in trust, rather than distributing the assets outright, tell them why. That way, a child will not feel sandbagged upon your death, when you are no longer available to explain your reasoning and actions.

Try and clear the air before your passing, so that unnecessary hurt feelings don't result after the already painful grief of your death itself.