Sunday, October 28, 2012
When it comes to trying to determine what each child should receive, a parent should take into consideration a variety of different aspects about their children when making the final determination. Here are some of aspects that a parent might want to consider:
- A parent might want to consider making an unequal distribution between children if one child is significantly more wealthy than the others. So parents might want to make an unequal distribution if one child has a greater financial need than the others.
- On that note, a parent might also want to take into consideration the financial management ability of their individual children. For example, if one of the children has a gambling problem or has a tendency to get into credit card debt, then that parent might want not want to give that child anything. If they still do, parents might want to take into consideration all of the estate planning options such as establishing a trust to ensure that the money that they leave their child is managed well by someone, a trustee, who can evaluate their child's proposed expenses.
- Another problem that a parent might face is whether a child has had multiple marriages, especially if the parent is not particularly fond of their child's spouse. In that case, parents might want to follow a similar path as with children who are not good at managing money. This could protect the funds from divorce proceedings.
- A parent might also want to examine the health of their individual children. If one needs more money than other for medical expenses, than it might be a good idea to give that child more. In this situation, a parent might want to purchase life insurance and name one child as the beneficiary of that fund or list the trust as the beneficiary if the intended beneficiary is still a minor.
- This could also apply if the child has a disability. In this especially true if the child requires governmental assistance. There is a special type of trust called a Special Needs Trust that can "provide [a method to] supplemental funds for a disabled child in a way that does not disqualify that child from needs-based government assistance."
- A parent might also want to consider how much financial aid he or she has given one particular child. Parents might consider making a larger gift to the child that has not asked for much.
- Finally, a parent might consider not giving a gift to one child if that child is estranged from the family.
See Liza Hanks, 7 Reasons Kids Shouldn't Be Treated Equally, Business Insider, Oct. 26, 2012.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) and Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.