Leaving your money and other assets to your children is not something to take lightly. Many people simply do not have wills or put together an estate plan with only a few minutes of consideration.
The problem is that an inadequate estate plan may leave your children fighting over the inheritance. In some cases, this destroys families. Children never speak again. The fallout is everything the parents never wanted.
How do you prevent this? There are a few ways to do it:
1. Update your estate plan. Make sure it lists all current assets. The last thing you want is for a 15-year-old will to completely leave out the newer assets your children have the most interest in.
2. Be specific when it comes to personal belongings. They may have little value, but children often fight over them due to sentimental value. Do not vaguely leave everything to your children and let them divide it all. Pick out each specific item and say whom it goes to directly.
3. Be very clear if you loan money or give gifts before you pass away. For instance, if your son ran into financial trouble and you gave him $30,000, was that a gift that should never get paid back or a loan he owes to your estate? The other children will want to know.
4. Value your family’s input. Talk to your children. Have them work with you to create the ideal estate plan. Be open to what they want. You may have an idea of who should get what, but your children can tell you what they want and expect. Having these conversations can make sure everyone is on the same page and head off disputes.
5. If possible, do not pass assets to children jointly. For instance, if you have three children, is leaving your family home to all three wise? They may fight over payments and responsibilities. What if one child wants to sell and the other two want to keep it? What if all three want to own it outright and live in it? It is usually best to divide things so that children clearly understand what they own.
6. Consider your children’s personal relationships. Do you have a middle child who always felt neglected or a first-born child whom the others kids always assumed was the favorite? These dynamics may have disappeared for years or decades, but they can come back after you pass away. Siblings who fought as children may be more likely to fight over the estate.
The key to success is to make sure you really understand your legal options, to plan well in advance and to carefully consider the ramifications of every clause in your estate plan.