A recent article in FEDWeek, “Preparing Your Heirs for an Inheritance,” suggests having your children meet with your estate planning attorney and professional advisors so that they can explain what you’ve been doing when it comes to your estate plan. This could include any tax planning tactics that you’ve been using, in order for those tactics to be continued after your death. Likewise, if you have a broker, your heirs should meet with this investment advisor for a review of your portfolio strategies.
If you have investment property, remember that it’s not easy to divide a building. Your heirs might not agree about how the property should be managed. Be realistic and ask yourself if your kids can work together to manage the real estate. You may want to leave the investment property to the one child who really can manage real estate while leaving your other heirs others assets. Another option is to provide that some of your children buy out the others at a price set by an independent appraisal.
If one child isn’t ready to handle an inheritance or if one of your children is in a shaky marriage, inherited assets could be lost in a divorce or spent frivolously. In these situations, ask your estate planning attorney to create a trust to hold your assets after your death with restrictions on the trust funds.
You can stipulate that some of the trust fund will be distributed when the beneficiaries reach a certain age and that more funds are to be paid out five or ten years later. This plan can work well if you believe that the trust beneficiaries will become better at handling money as they get older or will have resolved marital problems by then.
If you decide to go with a trust, you may want to discuss its terms with your beneficiaries while you’re still alive, so they’ll know what to expect. If you think that might not be easy, leave a letter of instruction to be read–or a video to be shown–after your death, explaining your actions.
Reference: FEDWeek (February 11, 2016) “Preparing Your Heirs for an Inheritance”
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