Did you include your grandkids in your will? 5 Tips to Avoid Common Problems
As we build wealth, we naturally desire to pass that financial stability to our offspring. With the grandkids, especially, we often share a special bond that makes us want to provide well for their future. However, that bond can actually turn into a weakness if proper precautions aren't set in place. If you're planning to include the grandchildren in your will, here are five potential dangers to watch for, and ways you can avoid them.
- Including no age stipulation.
We have no idea how old the grandchildren will be when we pass on. If they are under 18, or if they are financially immature when you die, they could receive a large inheritance before they know how to handle it, and it could be easily wasted.
Avoiding this pitfall: Create a long-term trust for your grandchildren that provides continued management of assets regardless of their age when you pass away.
- Too much, too soon.
Even if your grandkids are legally old enough to receive an inheritance when you pass on, if they haven't learned enough about handling large sums of money properly, the inheritance could still be quickly squandered.
Avoiding this pitfall: Outright or lump-sum distributions are usually not advisable. Luckily, there are many options available, from staggered distributions to leaving their inheritance in a lifetime, "beneficiary-controlled" trust. An experienced estate planning attorney can help you decide the best way to leave your assets.
- Not communicating how you'd like them to use the inheritance.
You might trust your grandchildren implicitly to handle their inheritance, but if you have specific intentions for what you want that inheritance to do for them (e.g., put them through college, buy them a house, help them start a business, or something else entirely), you can't expect it to happen if you don't communicate it to them in your will or trust.
Avoiding this pitfall: Stipulate specific things or activities that the money should be used for in your estate plan. Clarify your intentions and wishes.
- Being ambiguous in your language.
Money can make people act in unusual ways. If there is any ambiguity in your will or trust as to how much you're leaving each grandchild, and in what capacity, the door could be opened for greedy relatives to contest your plan.
Avoiding this pitfall: Be crystal clear in every detail concerning your grandchildren's inheritance. An experienced estate planning attorney can help you clarify any ambiguous points in your will or trust.
- Touching your retirement.
Many misguided grandparents make the mistake of forfeiting some or all of their retirement money to the kids or grandkids, especially when a family member is going through some sort of financial crisis. Trying to get the money back when you need might be difficult to impossible.
Avoiding this pitfall: Resist the temptation to jeopardize your future by trying to "fix it" for your grandchildren. If you want to help them now, consider giving them part of their inheritance in advance, or setting up a trust for them. But, always make sure any lifetime giving you make doesn't leave you high and dry.
If you're planning to put your grandchildren in your will or trust, we're here to help with every detail you need to consider. Contact us at (678) 809-4922 or get our book, Estate Planning for the Modern Family, to explore your options and protect your family.
Mr. Farrell is the author of Estate Planning for the Modern Family: A Georgian's Guide to Wills, Trusts, and Powers of Attorney. You can learn about his book here and learn more about John here. Join the more than 1,500 people who subscribe to his Newsletter here. Feel free to send John a message here.
