Are Your Grandchildren in Your Will? Five Thoughts to Consider
As an estate planning attorney, when I meet with clients it is always amazing how much grandparents will do for their grandchildren. Grandchildren seem to hold a special place in our hearts. Often as we get a little older and our grandchildren come along, so does our financial wealth build. When you include grandchildren in your will, there are some things you should think about:
1. Age Requirements
We don’t know when we are going to pass on. We don’t know how old our grandchildren will be when we pass on. We do not know how mature or financially savvy they will be when we pass on. What happens when very young or inexperienced people inherit money? Fast cars, bad investments or even worse.
Consider creating a long term trust for your children and grandchildren. You can help them learn to manage the inheritance and protect them from creditors and their own folly.
2. How Much
In a related thought: what if they get too much too soon? Giving too much money to a young person can often be squandered. Face it: we all have people in our families for whom any outright gift of money would probably do more harm.
At the very least, we know people who have received sums of money and it is quickly squandered. Consider this – use a trust for your grandchildren that allows them to learn how to manage money. They can serve as a manager of the money but have help in determining when and why money should be distributed to them.
3. Clear Communication of Purpose
A lot of people have grandchildren who can handle their money and manage their affairs just fine. It is great if you have grandchildren like that. However, if you have something specific in mind you would like your grandchildren to do with any inheritance you leave them, they will never know what you wanted unless you communicate it to them. Your instruction can be very easily forgotten if you just have a family chat at a holiday meal.
Consider this: in your will or trust, why not say exactly you would like each grandchild to use? Make your wishes clear.
If someone with a fishing pole in their hand says they are going to the bank, we would think they are going to the river. The ambiguous statement “I am going to the bank” is clarified by context. Sometimes however, in written language it is more difficult to be clear. When you are unclear, you can open up a door for people to abuse your beneficiaries by challenging your plans.
Try to be as clear as possible in every detail concerning how you want your grandchildren to use their inheritance. When working with an experienced estate planning attorney, take the time to explain to them what you want. Make sure they take the time to communicate your wishes as described.
5. Invading Retirement Funds Early
Many people have children or grandchildren who may be going through tough times. When this happens (because people love their children) they may be tempted to dig into their retirement money.
Try to resist this temptation if you can. Sometimes a grandparent fixing it for a grandchild may not be the best thing for them. Another way to handle it is to let them have part of their inheritance early, or you could even set up a trust for them now to be managed for their benefit. That way, their creditors cannot take advantage of them. In any event, always remember that no gift you give should leave you in the position of running out of money.
If you really care about your grandchildren and you want to put them specifically in your will or trust I am here to help with every detail you need to consider. If you have any questions please call Doug Thesenvitz at (605) 334-9448.
I look forward to hearing from you.
Thesenvitz & Mickelson, LLP