Nov 19, 2013

Should your Florida estate plan stagger your child's inheritance?

In my Florida estate planning practice, I have noticed that increasing numbers of my clients' children  remain "young" longer than their parents or grandparents did. A generation ago, people in their 20s, 30s and beyond who had not yet established a career or who did not have a stable marriage or children were fairly atypical. No longer.

Some say we have raised a crop of lazy adults who feel entitled to get things without hard work. That is probably true for some late bloomers, but the truth is more complex. Today's young adults are confronting far less bountiful opportunities than their parents. It's a much harsher world out there. 

No surprise, then, that today's Baby Boomers are planning their estates differently from the way their own parents did. Instead of giving a child an inheritance in a one-time, lump-sum distribution, clients are more inclined to use trusts that stagger distributions. Clients may want their children to begin receiving distributions when the kids are well past the age of legal majority - at 25, 35 and even well beyond that. The idea is to provide them with a cushion in a world where it's harder to come by economic security, stable employment and a fixed pension. And clients do not want to give away too much too soon, for fear of squelching their children's initiative. (Reuters ran an article this year that discusses this trend in estate planning. You can read it here.)

The plans I design for my clients usually give the trustee some discretion over the monies in the interim, before the age-fixed distributions are made, so that the children can get funds for certain specific purposes, such as purchasing a house or additional vocational training. I also can help a client create a "carrot-and-stick" plan that builds in incentives for behaviors the client wants to encourage; for example, the trust provisions can be designed so that an adult child receives more, sooner, upon the completion of college.

While creating a trust with staggered distributions and/or strings attached can protect your child economically and encourage him to get his act together, I caution about controlling too much from beyond the grave. No adult, even a self-acknowledged late bloomer, enjoys being treated like a child at 25, 30, 40 or beyond. Remember, your legacy is about more than money - it's also about values and memories. You don't want the provisions of your trust to generate resentment toward an over-controlling parent or grandparent, even if you are not around to see that resentment first-hand.
Needless to say, all of this requires careful, detailed discussion with  a competent Florida estate planning attorney who understands your desires and can design a thoughtful, effective plan to achieve them. Contact us or your own estate planning attorney for assistance.

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