Smart Ways to Leave Your Kids Their Inheritance
Most parents know they want their children to inherit their estate someday. What they may not know is that, without an estate plan, their kids could inherit a big lump sum on their 18th birthday! Even parents of the most responsible children may not want this. The good news is you can put legal documents in place that override this default rule.
Here are three options, each with its own pros and cons:
1. Lump Sum at a Specific Age
Pro: Simple and straightforward; your kids receive their inheritance at an age you choose, like 21 or 25, and have full control from that point.
Con: Receiving a large sum all at once can be overwhelming, especially for young adults who may not have financial experience.
2. Staggered Distributions
Pro: Helps kids manage the inheritance gradually, giving them a portion at different ages—such as 1/3 at 21, 1/3 at 25, and the rest at 30—allowing them to learn financial responsibility over time.
Con: While staggered, the funds are still accessible at set ages, which may not fully protect the assets from poor financial choices or life circumstances.
3. Lifetime Children’s Asset Protection Trust
Pro: Provides long-term protection by appointing a trustee to manage and distribute the funds as needed, keeping the assets secure and sheltered from creditors, lawsuits, or personal challenges.
Con: Involves more complex planning and requires trust in a chosen trustee to make appropriate decisions.
Getting Started
Each of these options has its unique benefits and drawbacks, and what works best depends on your goals. Take the first step towards peace of mind by booking a Peace of Mind Planning Session with Attorney Candice McPhillips. This is a 1-hour Zoom meeting where we will review your questionnaire, answer your questions, discuss your options, and review my unique flat fee packages! If we decide we’re a good fit to work together, we’ll take the next steps. And if not, that’s fine too! Book your Peace of Mind Planning Session HERE. Mention this blog and I’ll waive the $450 session fee!
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This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided to clients of McPhillips Law in response to a specific fact situation.
