Estate Planning Protection from a Financial Advisor
Inheritances can sometimes go awry.
Parents usually want to split their money evenly between their kids. But what if two kids get most of the money, and the rest get very little? Resolving disputes in court can be tough. It's expensive, can cause family rifts, and proving inheritance theft is hard.
How to Protect Your Inheritance from Manipulation
Many parents may not think their children would manipulate an inheritance for personal gain. However, it happens more often than expected. The temptation of money can sometimes override ethical behavior. Why take the risk with your assets?
Having a plan in place can ensure your assets are distributed exactly as you intend. Here are five key points to help you through the process:
Plan
Start by consulting an experienced estate attorney. Discuss your wishes with them, and they will recommend the best tools for your situation, such as wills, trusts, and other options. For straightforward estates, a will might suffice. However, for more complex estates, trusts can provide greater privacy and control.
Your estate attorney will help you determine the best choice for your needs.
Inform
Decide whether to discuss your estate plan with your children. There are pros and cons to consider.
Discussing your estate plan can provide clarity, prevent future conflicts, and prepare them for their roles. However, it might also lead to disagreements and stress upfront.
An estate planning attorney, with their experience from other families, can help you make this decision.
If you choose to share your plans with your adult children, such as how you intend to divide your estate, you don’t need to disclose specific dollar amounts. Additionally, consider including an "inform" clause that requires any changes to the legal documents to be communicated to all beneficiaries. This provision can deter anyone from altering documents for personal gain.
Safeguard
This step involves selecting a trustworthy trustee to carry out your estate plan wishes. This person or company will be responsible for implementing your directives after your death according to the estate plan.
With trusts, you can appoint multiple trustees. This can help manage complex family dynamics or conflicts of interest, providing a neutral balance of power.
Trust administration can be time-consuming and complex. Hiring a professional third party for this task ensures fair decisions and saves time and effort for beneficiaries and family. Many financial institutions have extensive resources dedicated to trust administration.
Execute
Execution involves ensuring your assets are properly titled, such as real estate, bank accounts, or investments.
Titling your assets in a trust means transferring ownership from yourself individually to the trust entity. This facilitates efficient management, distribution, and protection of assets according to your wishes after your incapacity or death.
If your assets are not titled correctly, they may not be protected by your trust. This could result in them going through probate or other legal issues. This may happen when you are unable to make decisions or pass away.
Review
Review your estate plan regularly to make sure it reflects your current wishes and circumstances. Update it as needed.
It's a good idea to review your estate plan regularly, every three to five years. You may want to review it more often if significant changes occur in your life. This will ensure that your estate plan remains up-to-date and reflects your current wishes.
Bottom Line
Individuals with any amount of wealth should be aware of the potential for inheritance manipulation by family members, as it can significantly threaten asset preservation and family harmony. Not all families have inheritance issues. However, it is wise for individuals to safeguard their assets. This can help minimize conflicts over inheritance.
Disclosures:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.