Many parents have legitimate concerns that their children, grandchildren or other heirs might not be responsible with their inheritance. If you are worried your beneficiaries will make poor financial decisions, spend the money on vices or engage in some form of manipulation, you can work with an estate planning attorney to attach conditions to your will or trust.
There are two basic options you have in this situation: you may disinherit the individual or place certain conditions on the assets you leave behind to that person.
Disinheriting a child
Although you may not disinherit a spouse, the law does allow you to leave nothing to your adult children. If you decide that this is the best course of action, you must expressly state this desire in your will. If you simply do not include your child in a will, he or she could challenge the will’s validity in court, with the hope of receiving an inheritance anyway.
You do not have to explain your reasoning for disinheriting a child in your will, although you may leave behind separate letters or estate planning documents attached to your will that give you the ability to provide further context into your decision.
Adding conditions for beneficiaries
If you would like to leave your child with money or assets, but are worried about his or her maturity, you may use several strategies in your estate plan to safeguard against potential irresponsible actions. The following are a few examples:
- Leave money in a trust: Your child’s inheritance would go to a trust, and you would appoint a trustee to distribute and invest that money. The trustee should able to say “no” if your child has not met certain conditions and should be a generally reliable, trustworthy and organized person with at least some connection to your family. You may choose a friend, relative or your estate planning lawyer.
- Establish conditions: You may add strings to an inheritance, requiring your child to meet certain conditions before the money gets distributed. For example, you may state that the child must reach a certain age, must complete a certain level of schooling or must become sober (if applicable).
- Pay out in installments: Rather than leaving a lump sum of money to a child who has a reputation for spending quickly and recklessly, you may have that money pay out over a certain period of time. For example, your child could receive some money at ages 25, 30 and 35. You may set up this schedule as you see fit.
Again, you do not need to leave any explanation for why you decided to add these conditions to your will. You do have the option of including an explanatory letter with all your other documents, but you are under no legal requirement to do so. It may be a good idea to include some context to avoid hurt feelings and unnecessary challenges to your will, however.
Consult a skilled estate planning lawyer if you have further questions about this process or believe it may be a feasible option for you.
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Einheuser Legal, P.C. is an estate planning law firm in Bingham Farms, Michigan. We help families set up wills and living trusts. Attorney Michael Einheuser is an experienced estate planning lawyer serving residents in Bingham Farms, Troy, Farmington Hills, Rochester Hills, Southfield, West Bloomfield Township, and Bloomfield Township.
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