Most parents want to love and treat all of their children the same, but when it comes to estate planning, not every child should be treated the same. In fact, insisting on treating all children exactly the same in an estate plan can often lead to disastrous consequences.
Each of your children is unique, and their circumstances may grow increasingly different, especially as they become adults and acquire jobs and extended in-law families. Each child should accordingly be treated as a unique individual.
Here are a few ways that wise parents might consider treating their children differently in an estate plan, but sill equally:
- Not naming all of your children as successor executors.
- Gifting the annual gift exclusion of $13,000 outright to some children while putting it in trust for another child.
- Leaving one child’s inheritance outright while leaving another child’s inheritance in trust–possibly even skipping a generation to help children or grandchildren.
- Some children will benefit from structured payments and others can deal with a lump sum of money or assets
The fact of the matter is that all of your children will be different people, with different strengths and weaknesses. While one child may love the trust and challenge that comes with being named executor, another might feel crushed under the weight of responsibility. One child might take an outright inheritance and invest it for retirement, while another child may want to do that, but have an ex-spouse or creditors who would seize an unprotected sum of money, leaving the heir with nothing.
Regardless of how you leave assets to a child or loved one, you should consider the ability you have to help them protect the assets from the reach of current or future creditors. There are new affordable asset protection trusts that can help protect assets from your creditors as well as your families creditors after you are gone.
Every parent knows that it is impossible to treat all of their children exactly the same. But it is possible to know your children, to be aware of their circumstances, strengths and weaknesses, and give them an equal inheritance in different ways.