A business acquaintance posed a very interesting question as the title of her newsletter recently: “What Do We Owe Our Children?”
As estate planners, we meet with parents every day and children, for obvious reasons, are always an integral part of the discussion. Young children, adult children, step-children, grandchildren, adopted children, children with special needs, troubled children, estranged children…One thing is certain, the topic is never one-size-fits-all.
This is why the decision on how to provide for children – in life and in death - is a very personal one. At the very core of it all is an individual’s belief system. What do you believe that you owe your children?
For some, the answer is everything. You (and/or your children) believe that they are entitled to whatever you have and whatever you leave behind on this earth, no questions asked. These days, this often appears to be the societal expectation. It is certainly what makes for the most exciting news stories anyway. (See “Fair Or Outrageous: New Jersey Teen Sues Her Parents to Pay Up for College”.) Entitlement is all the rage these days and some parents buy into it, often at their own peril.
For others, the answer is virtually nothing. Your child(ren) are not entitled to anything; to each his/her own, right? You may plan to spend it all, indulging in expensive things, traveling the world or making sizable charitable donations - the goal being to leave as little as possible behind. Society views this as harsh. Is it? Some of the wealthiest people in the world believe it’s the right thing to do. Michael Bloomberg once said, “the best financial planning ends with bouncing the check to the undertaker.” (See “15 Tycoons Who Won’t Leave Their Fortunes to Their Kids”.)
In between those extremes lie the middle ground. Legacy, for you, may mean leaving your child(ren) with something, but not everything, especially all at once. Perhaps you want to place conditions on your bequest, such as age requirements or guidelines for how an inheritance is to be used. Maybe you feel passionately about taking care of other relatives or leaving a charitable footprint as well. In these cases, setting the expectation with your children up front is critical. You don’t want them expecting or replying on an inheritance they will never get. (See “Leaving an Inheritance? Manage Expectations”.)
What do you believe you owe your children? Whatever the answer, without a proper plan in place, you’re leaving it up to chance!
- Gary Altman, Esq.
Estate Planning for New Parents