One reason many people want to create an estate plan is so that they can leave a legacy for their children. But what if you don’t want your adult children to inherit money? Whether it’s because of addiction, a history of mismanaging funds, or simply because your children are doing well and you’d rather leave it to a nonprofit, you have control over who inherits what when you create an estate plan. Without one, you leave your estate at the mercy of the courts.
Ways to leave a legacy for your children that don’t involve cash
For parents who have minor children, setting up a trust is the simplest way to make sure your children are provided for. The trust can be placed with a trustee and passed on to the children when they become adults. But for parents with adult children, it can be a little more complex if you don’t want them to inherit money.
Financial maturity doesn’t automatically happen when a person becomes an adult. Believe it or not, lottery winners file bankruptcy three to five times more often than those who don’t win the lottery. No matter their age, people don’t always know how to handle newfound wealth.
You can provide for your children with non-monetary assets. You could leave your home in a living trust, which will ensure that your child has stability. If you’re concerned about them selling the home for cash, you can stipulate that the money from the sale be reinvested in another house. You can also earmark money for the purpose of paying off loans or a mortgage, rather than passing down the money outright.
If you need help deciding what is best for your child, contact us. Our team of attorneys will help design an estate plan that is right for you and your family.
Changing a will after it’s written and signed
There may come a time when you want to make changes to your will. That could include changing your beneficiaries, or even disinheriting someone. There are any number of reasons you may want to do that.
- Change in marital status (divorce)
- Medical/health status
- Lack of need (or increased need)
- Previous support or gifts already given
The last is the most common reason someone may be disinherited from a will. If much has already been given to a child, you may want to disinherit them and leave the rest of your estate to someone else, or to a charity.
Whatever the reason, if you have previously designated someone as your beneficiary, you may need to disinherit them so you can redesignate others, or a charity, as your new beneficiary. You don’t need a specific reason to disinherit someone. (Some states do have “forced inheritance” laws that prevent complete disinheritance of children and/or spouses.)
Simply leaving out the name of a biological child in your will is not enough to make sure he or she doesn’t receive part of your estate. If you want to disinherit a child, you will have to state that explicitly in your will.
Rather than disinheriting, however, it could be less painful to your family if you set up a trust that specifies how money can be used, or pass down non-monetary assets, as we described earlier. Create a complete estate plan with our team to ensure your estate is passed down the way you want it to be.
Alternatives to disinheriting children from a will
If you’re concerned that leaving a cash inheritance for your children could cause more harm than good, but still plan to pass down money, consider educating them early on in their childhood. Prepare them now for the inheritance that they will receive. Talk about budgeting, saving, inflation, the importance of retirement planning, and opportunities that can come from financial independence.
You can also use a phased distribution schedule to avoid giving your children a windfall. Our team at eLegacy can help you get documents in place that define when assets are distributed. That can be based on age as well as other circumstances. This is especially helpful if you’re concerned about reckless behavior or financial irresponsibility. You don’t want your children to squander your wealth, but you probably also want them to be secure as well.
Many parents are glad to know that you can also make specific rules that prohibit a child from receiving any distributions if they are abusing substances, have engaged in criminal activity or are otherwise unfit.
If you’d like to discuss your specific situation with our attorneys, schedule a free consultation today.