Trust Fund Baby? Navigating the Inheritance Talk with Your Children
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A concern of many parents with a sizeable estate is that their children will inherit the assets before they are emotionally mature to handle it. Further, many parents of sizeable wealth either do not want to give their children a sense of entitlement or simply do not want to discuss their wealth with their children.
Despite these concerns, parents often avoid discussing the issue of inheritance with their children. However, failing to discuss the topic of inheritance at all could create even more issues. Discussing inheritance with a child may prevent them from becoming a “trust fund baby” and, instead, raise them to be a financially responsible adult.
When you first begin your estate planning, determine when your children are ready to know. Young children may not be able to process exactly what an “inheritance” entails. However, older children may be ready to know that their parents have put away money for their future. At this stage, parents may want to introduce the broad concept of inheritance while reminding the child of the value of his or her own hard work. For example, let them know that money has been set aside specifically for them in order to pay for college and any other schooling they desire. There is a fine line between introducing a child to the concept of an inheritance and dropping the bombshell that they are set to inherit millions of dollars.
Later in life, assess your adult children’s ability to manage money. A child’s personality may determine how a parent may plan to hold and administer the assets after they have passed away. Some parents choose to place their assets into a Trust where the child has liberal ability to tap into the Trust. Other parents choose to restrict what their child can request. Either way, it is important to notify for a parent to prepare their child as to what they can expect. Equally important is for the parent to be clear as to what is expected from the child—responsibility, charitableness, self-worth, work ethic, etc. Not discussing these issues, or waiting too long to do so, can create issues between parent and child such as mistrust, dependence and confusion.
Lastly, the language within the Trust itself may guide the conversation as well. Parents can structure a Trust to only pay out to the child at certain ages or upon certain life events (such as graduation from college). The milestones themselves may emphasize a parent’s value of certain life events.
A structured Trust, a competent Trustee, and a conversation between parent and child are the best preparations to continue a family’s legacy. A well-informed and prepared heir turns out better in the long run for both the parents and the child.
ABOUT THE AUTHOR: By: Christina M. Heischmidt, Attorney at DunlapWeaver PLLC
Christina is an attorney at DunlapWeaver PLLC practicing in Virginia and the District of Columbia. Her areas of practice focuses primarily on civil litigation in the areas of commercial, business and bankruptcy law. She also specializes in comprehensive estate planning and corporate transactional law. She was named to Virginia Business’s 2012 Legal Elite in Taxes/Estates/Trusts/Elder Law. Christina is active in numerous organizations including the Fairfax Bar Association’s Young Lawyers Section and the Trusts and Estates Section, the Northern Virginia Bankruptcy Bar Association, McLean Estate Planning Council, and a local women’s golf/networking group.
Copyright DunlapWeaver, PLLC
More information about DunlapWeaver, PLLC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
When you first begin your estate planning, determine when your children are ready to know. Young children may not be able to process exactly what an “inheritance” entails. However, older children may be ready to know that their parents have put away money for their future. At this stage, parents may want to introduce the broad concept of inheritance while reminding the child of the value of his or her own hard work. For example, let them know that money has been set aside specifically for them in order to pay for college and any other schooling they desire. There is a fine line between introducing a child to the concept of an inheritance and dropping the bombshell that they are set to inherit millions of dollars.
Later in life, assess your adult children’s ability to manage money. A child’s personality may determine how a parent may plan to hold and administer the assets after they have passed away. Some parents choose to place their assets into a Trust where the child has liberal ability to tap into the Trust. Other parents choose to restrict what their child can request. Either way, it is important to notify for a parent to prepare their child as to what they can expect. Equally important is for the parent to be clear as to what is expected from the child—responsibility, charitableness, self-worth, work ethic, etc. Not discussing these issues, or waiting too long to do so, can create issues between parent and child such as mistrust, dependence and confusion.
Lastly, the language within the Trust itself may guide the conversation as well. Parents can structure a Trust to only pay out to the child at certain ages or upon certain life events (such as graduation from college). The milestones themselves may emphasize a parent’s value of certain life events.
A structured Trust, a competent Trustee, and a conversation between parent and child are the best preparations to continue a family’s legacy. A well-informed and prepared heir turns out better in the long run for both the parents and the child.
ABOUT THE AUTHOR: By: Christina M. Heischmidt, Attorney at DunlapWeaver PLLC
Christina is an attorney at DunlapWeaver PLLC practicing in Virginia and the District of Columbia. Her areas of practice focuses primarily on civil litigation in the areas of commercial, business and bankruptcy law. She also specializes in comprehensive estate planning and corporate transactional law. She was named to Virginia Business’s 2012 Legal Elite in Taxes/Estates/Trusts/Elder Law. Christina is active in numerous organizations including the Fairfax Bar Association’s Young Lawyers Section and the Trusts and Estates Section, the Northern Virginia Bankruptcy Bar Association, McLean Estate Planning Council, and a local women’s golf/networking group.
Copyright DunlapWeaver, PLLC
More information about DunlapWeaver, PLLC
View all articles published by DunlapWeaver, PLLC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
