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A Parent’s Dilemma

January 12, 2020 in Uncategorized | MARTIN WREN, P.C. | LEAVE A COMMENT

There is a dilemma amongst parents who have to decide how to plan for their children who don’t have children. Often parents have 2-3 kids, one will have children, and one will not. So parents are asked, if the child without children dies and there is still money left in his or her trust, who should that money go to? 

One school of thought would be — to anyone he or she wants! His or her spouse, his or her favorite charity, to whoever. The other school of thought is the money left over should either go to the other sibling, or the children of such sibling, to keep the funds within the family, thus protecting the bloodline. 

This is a controversial topic for families. When they are all in the room, the child with children, of course, is loudly stating, “protect the bloodline!” while the child without children is screaming just as loud, “but my spouse is MY family, or my pets are important, or my charities should get the money.”

The reality is, most assets that are passed on with or without an estate plan, will go to the beneficiaries “outright”, meaning right away. Once the child without children gets control over it, he or she can prepare his or her own will to give it to whoever he or she wants. 

If a person really wants to make sure the funds stay within the family, then the proper thing to do is to keep the funds “in trust.” If the person spends it all based on the distribution terms of the trust, then that would be fine. If the person dies before full distribution, then the funds go to the remaining siblings and their descendants. 

At the end of the day, it is up to the parents to decide what is important to them. They should prepare written instructions in a will or trust to assure that their wishes are actually followed. To reduce the amount of fighting or confusion later on, it would even be better to communicate with the children what their wishes are, and why they chose such wishes. That way everyone hears it at the same time, and they can ask questions for clarification. 

In any event, the moral of the story is, do your plan now with a will lawyer, like a will lawyer in Schaumburg, IL, while you are competent and not in an emergency situation.

Thanks to Bott & Associates, Ltd. for their insight into estate planning as a parent.

 

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