You may have heard the saying, “Love your children equally, but treat them uniquely.” That’s good general advice, but it also applies to estate planning, especially for high-net-worth individuals.
When drafting or revising your plan, structuring inheritance payments to children can be challenging depending upon their ages. The more you have to distribute, the more questions you are likely to have.
Age-based inheritance strategies to consider
It is advisable to consult with an experienced estate planning attorney to help you navigate this process. Your lawyer understands the strategies for differing age groups, such as:
- Young children: For kids 12 and younger, consider a lifetime trust or one that lasts until they are in their 40s. Having a trusted grownup oversee these funds is crucial until they become adults and become financially astute. A trust can protect them in a divorce or if they experience employment difficulties later on.
- Teens to college graduates: While older children may have some idea of what direction they want their lives to take, it’s still a good idea to consider a long-term trust to oversee those funds. You can include periodic payments during the term helping them pay for college, buy a house, start a business or meet other expenses.
- Young adults: For children with families of their own, it may be advisable to give them a quarter to half of their inheritance outright, depending upon the size of the estate. That will help them buy a house, pay private tuition or pay for monthly expenses. However, the larger the inheritance, consider a trust for the rest to guard against divorce, creditors or poor money management skills.
- Older children: Once a child turns 40 years old, it may be better to give them their entire inheritance. A trust may no longer be needed except for professionals, such as medical doctors, where there’s an ongoing risk of being sued, or their marriage is on the rocks.
Maximize your wealth and legacy for future generations
Each family’s needs are different when establishing an estate plan. Likewise, the way you distribute inheritance to children may differ for each child, depending upon their age, career or money management skills. A knowledgeable attorney can help you find a unique plan that protects your family’s future.