Written by Robert T. Nickerson
Whenever a family completes or updates their estate plan, the immediately feel a sense of accomplishment. Happiness and security are other thoughts and emotions that probably come with it too. The whole point of an estate plan is to give families ease of mind by having their assets, property and potential trust funds all set up legally on paper so that complications don’t arise later on. Does that mean once you sign that last signature, your out of the woods? That depends on how another question is answer; does your estate plan pass the multigenerational test?
You’d be shocked to learn that many estate plans wouldn’t pass that test. That’s because of one thing; a lack of communication. I’ve seen this happen a lot because no matter how big or small a family is, each generation tends to have their own plans created. Your parents may have had one created years ago or maybe you have an offspring that talks about having a plan created without talking to you first. On top of that, it only takes a few years for many estate plans to become dated. One thing that can never be fully planned is life. Things happen. New Children are born. Potential successors may not be as reliable as before. A divorce might have happened. This is why communication between your family is very important. You need to stay on top of what going on in everyone’s lives. Parents, grandparents, children, grandchildren and even great-grandchildren all have things could alter an estate plan.
Let’s look into one thing that could call for big changes to an estate plan; new children or grandchildren born.
When families expand and bring new children in the mix, there’s a lot of joy and excitement. The parents have probably received tons of gifts for the new baby, but what about gifts in the form of money? Because parents are concerned about their child’s future college education, they know they want to accept money, but their also aware of the tax and even legal consequences. So what are more suitable options then just handing a check over?
A UTMA or a UGMA savings account is a very simple to open up and many banks offer this option. The downside is that these account types aren’t the most optimal if family wealth continues to expand.
But what if the child gets a scholarship or even decides not to attend college? These are possible scenarios that can also raise questions about a larger family estate.
Another good solution is a gift trust. As long as the writing is solid, the grantor can create a gift trust and pay the taxes on their behalf.
A good multigenerational estate plan can help answer those questions and set it in stone. Of course the real answer in how to have a better understanding in a large family is communication. There’s plenty of excuses that people will come up with including feeling like they’ll offend if they ask a parent how much money they make. One thing that people don’t have on their side is time. It only takes ten years for generations to change and the amount of wealth were passing on is only increasing.
Nickerson Law has built years of experience in helping various families and creating estate plans that are transparent and easy to understand. We also note specific time frames when they need to be reexamined. We even look at old plans to see if their still valid. Contact us below to learn more about what can be done for your families future with no obligation.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!