Estate planning carries many myths and misconceptions, but it comes down to very personal choices. Some parents believe they must leave equal inheritances for all their children, but this is not true. For example, parents who gift one child money for a down payment on a home may leave a larger inheritance to the other children. However, those who are giving unequal portions would be wise to explain the reasons why, either in person or through a letter included with the estate planning documents.
In some cases, a will is not the appropriate tool to meet the goals of parents planning their estates. A variety of trusts exist to provide more control over one’s bequests. Trusts may be more effective if any of the following circumstances exists:
- They have a child with special needs that involve lifelong expenses.
- They have a child with a substance abuse issue they do not want to fund, but they want to leave an inheritance in case the child seeks recovery.
- They want to protect a child’s inheritance from the child’s spouse who has debt issues.
- They have a child or grandchild who has low ambition, and they want to provide an incentive for the child to get an education, find work or meet some other goals.
With a trust, they can place specific terms on the distribution of the assets involved. These may include receiving a percentage of the inheritance after reaching certain ages or attaining specific milestones. Since each situation is unique, having legal advice throughout the estate planning process often results in more effective outcomes.