Leaving an inheritance to your children and grandchildren is something that you feel proud of and have worked hard to achieve. You want the money to only go to them and for them to use it wisely.
At the estate planning law firm of Beasley & Ferber, we encourage clients to consider potential scenarios that could impact whether adult children or grandchildren receive the full inheritance and how they use it. Although no one can predict the future, your current observations should give you a good indication.
Could One of These Scenarios Happen in Your Family?
Receiving a large sum of money from your estate should be a positive thing. However, some people have problems in their lives that prevent them from handling the windfall well. We outline some common scenarios below.
Immature Spending Habits
Have you noticed that your son, daughter, or grandchild spends all their money immediately after receiving a paycheck and then cannot pay their bills? A habit like this is a sure sign of an impulse control problem and may indicate you should not leave this person a large sum of money to spend all at once. Family members who foolishly spend money on get-rich-quick schemes should also raise suspicions.
Few things are as heartbreaking for parents and grandparents as seeing someone they love struggle with addiction. You want to see them get help, but the person has to be ready to accept it. You also do not want to enable their habit by providing a large inheritance they will use to buy drugs. Just remember that no one can demand proceeds from your estate and you have every right to limit an inheritance or put stipulations on it.
Current Financial Struggles
Is your loved one facing bankruptcy, a lawsuit, an expensive divorce, or other serious financial problem? Any of these situations could cause their inheritance from you to disappear in a hurry and still leave them owing more. If you see no obvious signs of serious financial problems, you can still ask about it before leaving part of your estate to a certain relative.
Maybe your adult child or grandchild is in a relationship with someone who has abused them or you just do not trust them. If they are married and divorce later, the abusive ex-partner could receive at least part of your inheritance. Current abusive partners could also keep the money from whom you intended to receive it by controlling their bank account.
You Always Have Options with Your Own Money
Your concerns are legitimate, and you can exercise various legal options to accommodate them. For example, you could assign a trustee to manage the inheritance of a beneficiary. The trustee controls when beneficiaries receive payments and how much they can take out with a single withdrawal. You can also establish contingencies for the money, such as that it only goes towards college tuition.
We understand these situations can be delicate and are here to help you navigate them. Please contact us to schedule an estate planning appointment and learn more.