The primary goal of most estate plans is providing the legal framework for the division of estate assets upon the death of the testator. If you have a moderate to large estate and you have children and/or grandchildren one of the most difficult decisions you have to make when creating your estate plan is how much to leave your children and/or grandchildren. How much is too much?

As a parent/grandparent you undoubtedly want to ensure that your loved ones are secure and well provided for in the event of your death; however, giving children/grandchildren too much can have significant negative consequences. Leaving too much to a beneficiary often results in the individual depending too heavily on the inheritance, often becoming the proverbial “trust fund baby”. Warren Buffet was recently asked how to decide how much is enough, yet not too much, when creating an estate plan. Part of his response was to say “I think that more of our kids are ruined by the behavior of their parents than by the amount of the inheritance.” There is much truth in his response. The example you set for your children/grandchildren will be more important than the amount of money you leave them with when you die; however, the dilemma must still be resolved somehow when you create your estate plan. Though each plan is unique, some guidelines that may help you decide how much to leave your children and grandchildren include:

Consider their ages and needs until they reach adulthood. Children who have yet to reach their mid-20s will need basic living expenses as well as education expenses. All of these expenses, however, can be addressed in a trust with a trustee having a certain amount of discretion for additional expenses.
Stagger an inheritance. For adult beneficiaries, provide for a staggered disbursement schedule. The largest disbursement should not be handed out until the beneficiary is well into his/her 30s or even 40s.
Use a trust to control the inheritance. Even a multimillion dollar inheritance can be tightly controlled by the terms of a trust. If a beneficiary is squandering the money given to him/her the trust terms can dial back the disbursements, forcing the beneficiary to decide on a more productive path.

Consult with your estate planning attorney about how much you should leave your children and grandchildren and about the best way to facilitate those gifts.