How to Ensure a Specific Child Will Receive an Inheritance
When planning your estate, you may want to ensure that a particular child inherits a specific piece of property or a specified amount of money and that such inheritance does not pass to any other heir. The following are some of the most effective estate planning methods to ensure a specific individual will inherit specific property or funds after the owner’s death while still giving the owner complete control over such assets during his or her lifetime:
1. Name your adult child as the pay on death or transfer on death beneficiary on a certificate of deposit or a savings, money market or brokerage account.
2. Name your adult child as the beneficiary of a life insurance policy.
3. Name your adult child as the beneficiary of an IRA, 401k, annuity or other retirement account.
4. Execute a transfer on death deed to real estate and name your adult child as the beneficiary.
Use a No-Contest Clause in Your Will or Living Trust
If you are concerned that your spouse or other heirs will contest your will to try to take property you want to pass to a specific child, consider using a no-contest clause in your will and other estate planning documents. The enforcement of no-contest clauses varies by state, so consult your estate planning lawyer about applicable state law and the best method of using a no-contest clause to defeat the intentions of a greedy heir.
Choose Your Executor or Trustee Carefully
The person you name as executor of your will or successor trustee of your living trust will have control over all property in your estate or trust during probate or trust administration. If you are concerned about your spouse or one of your adult children taking property from a particular child or trying to usurp a portion of such child’s inheritance, it is generally not a good idea to name your spouse or that particular child as executor or trustee. The person you designate to be your executor or trustee should be someone you trust to honor the provisions of your estate plan. If there is rivalry between your spouse and children or among your children, consider your options carefully when choosing your spouse or any of your children to oversee the administration of your estate.
Note: It is important to be aware of any community property or spousal share rights your spouse may have to your estate. Before gifting or transferring property to which your spouse may have a legal claim, consult a lawyer. In addition, there may be alternative estate planning methods which offer tax savings and other important benefits. Before executing your estate plan, deeds or other legal documents, talk to an attorney about the laws in your state, your tax situation, and your estate planning objectives.
Reasons You May Want to Protect an Adult Child’s Inheritance From Another Heir
When contemplating what will happen to your property when you die, you may be concerned about protecting one or more of your adult children from another heir. Sometimes, the heir who will try to take all or a portion of your child’s inheritance is a surviving spouse. However, in many cases the type of heir most likely to try to take your child’s inheritance is one of your other children.
In most families there are some siblings who are generous, loyal, and caring, while others have a tendency to be selfish or inconsiderate. If you are like most parents, you love all your children and want to ensure each child receives an equal share of your estate. Nevertheless, there can be circumstances in which you want to leave your estate to your children in unequal shares or you want to ensure one child’s inheritance is protected from another. For example, perhaps you made loans to one child that were never repaid. You may have paid tuition, housing, other educational expenses or medical bills for one child and not another. Maybe one child has lived with you rent-free while another is financially independent. You may have a child who tries to take more than his fair share in any situation. There may be a variety of reasons why you want to protect an adult child's inheritance to ensure one of his siblings does not take it.
Another situation that frequently results in an adult child losing his inheritance to another heir is when a parent has remarried. It is normal for a parent in a second marriage to feel conflicted about providing adequately for his new spouse while still leaving an inheritance for children from a prior relationship. If the children have not accepted your new spouse, it is reasonable to be concerned about how your new spouse will handle the distribution of your estate to your children when you are not around to protect them.
In some cases, the concern is not over the inheritance of real estate or investments, but family heirlooms, home furnishings, artwork or other personal property. You may want to ensure that one child does not come in and take items from your home when you intend them to be passed on to other children.
Unless appropriate steps are taken in estate planning, one of your children may end up in a battle for his share of your estate. Or, if you have a child that is non-confrontational or unassertive, his inheritance may ultimately be taken or reduced by your surviving spouse or one of your other children. Despite the common misconception that you have to pay a fortune to an attorney to make an estate plan, there are several simple and affordable steps you can take to ensure that money, property, or other assets in your estate will be inherited by a particular child.
Making Gifts of Property
Another way to ensure your adult son or daughter receives specific property to the exclusion of other children or a surviving spouse is to make an outright gift of property to the child during your lifetime. This can be done in a number of ways including:
Gifting cash to your adult child on a one-time basis or periodically; and
Giving a specific family heirloom, vehicle, or other item of personal property to your child as a gift during your lifetime.
When making gifts, be aware of the annual gift tax exclusion amount and your lifetime gift tax exclusion amount as well as when gift taxes may apply. If estate or gift taxes are a concern, consult an estate planning attorney.
Provide for the Inheritance in Your Will or Living Trust
Any inheritance you want your child to receive must be properly outlined in your will. If you have a living trust, the inheritance should be clearly outlined in your living trust as well. It is important that there be no conflict between the terms of your will or living trust and any property transfers or gifts you make to your adult child during your lifetime. For example, if your last will bequeaths your house to your four children in equal shares but you execute a deed to make one of your children a joint tenant on the house, that could result in a will contest which could be very costly. The terms of your will and living trust should be consistent with any actions you take to gift or transfer property to your child. If you want your adult child to inherit a specific item of property, your will or trust should clearly describe that bequest.
Make sure your estate planning lawyer is aware of any gifts or transfers you make to your adult child during your lifetime and any concerns you have about protecting your child’s inheritance. Your attorney can ensure your estate planning documents include language which protects your child’s inheritance and is consistent with any gifts or transfers you make to your child during your lifetime.
