Whether you have a small estate or a multi-million dollar estate, chances are that you plan to pass down those assets that you do have to the next generation. Before you simply gift everything you have to your children in your Last Will and Testament, ask yourself if that is the best way to go about passing down your estate? Are your children ready for a lump sum of money? Would you prefer to retain some control over your assets, even after you are gone? Often, staggering an inheritance is a better option for a beneficiary than simply gifting everything outright.
Assets can be passed down in your estate plan in a variety of ways. The simplest, and most straightforward way, is to gift assets in your Will. Gifts in a Will can be in the form of specific or general bequests; however, all assets gifted in your Will are gifted at the time of your death to the intended beneficiaries. This means that the entire value of your estate is transferred at one time to your children, assuming they are your beneficiaries. In the event your children are still minors at the time of your death, assets gifted to them will be held in trust until they reach the age of majority (18 in most states) at which time the assets will be disbursed to them unless you make alternative arrangements in your estate plan. Ask yourself whether it is a good idea to hand an 18 year old a lump sum of money? Even if your children are already young adults when you die, they may still lack the maturity and life experience to handle a lump sum gift, particularly right after the loss of a parent which is an emotional time for almost anyone.
A better option is to stagger the inheritance you leave for your children. This can be accomplished rather easily by establishing a trust that will protect your assets until your beneficiaries are ready for them. The beauty of a trust is that as the maker of the trust you can use the trust terms to distribute your assets in any way you choose to your children. You might give them a small lumps sum at age 18 with a larger one at age 25 and the remainder of the trust assets at age 35. Alternatively, you might provide for a monthly or yearly disbursement until they reach a certain age at which time the remainder of the trust assets will be disbursed.
Using a trust to stagger the inheritance you leave behind for beneficiaries allows you to retain a certain degree of control over the assets and, even more importantly, prevents your children from squandering their inheritance because they are too young and inexperienced to know better.
If you have additional questions or concerns about how to stagger an inheritance, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.
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