Experienced Brooklyn, New York estate planning attorney
Experienced Brooklyn, New York estate planning attorney Leonid Mikityanskiy works with young families with minor children to explain effective estate plan strategies, in addition to simply signing a Will or Living Trust that will give away all of your assets to your children. In fact, if your children are not mature enough, the inheritance may be wasted or may do more harm than good. Do you want your children to receive an inheritance when they turn 18 years of age, the legal definition of “adult”? The answer is probably “no” in most cases. If an 18-year-old can buy a red sports car with the inherited money, the 18-year-old probably will. That is not what you would want your children to use the money on. There are many successful Estate Planning and Asset Protection strategies to provide for your children to ensure that the inheritance is not wasted. Some strategies include:
- Give Your Children Income and Postpone Giving Assets.You may set up a structured estate plan so that your children only receive the income generated from the assets, or a small part of the principal capital, until a certain age. This will ensure that your children have a guaranteed standard of living by providing for their education, maintenance and support while the principal assets are not reachable by children, their creditors, or any divorcing spouses. If you own a business, you can provide that the income from the business goes to your children while the business itself will remain under the management of a trustee. Only after the child reaches a certain age or another milestone, will the child inherit the business.
- Raise the Age for Receiving Assets.You may draft a living or testamentary Trust in such a way as to give the inheritance to your children at an older age than 18. A good rule is that 21 is better than 18, and 25 is better than 21. With age, usually come certain responsibilities and maturity, including in making financial decisions. An 18-year-old may not have the maturity to handle a large sum of money, but a 25-year-old may be ready. You can split the inheritance in two, three, or more parts that will be provided to your children at certain ages, minimizing the risk that they will be able to waste all of it at once.
- Provide Milestone Payments.Instead of setting an age where a trustee will give your assets to your children, you can make the distributions discretionary by the trustee or provide milestones like graduating from college or graduate school, getting married, buying a house, or having children. When the child accomplishes each milestone, the trustee will make the specified payment. This will provide financial support to your children for each of these milestones, which usually cost money, so the financial support at the right moment will certainly be welcome.
- Leave the Assets to a Guardian.For young children or children with financial problems, you may want to specify a guardian and provide discretion to your guardian to determine how much of your assets to provide to your children and when. That gives the greatest flexibility to your guardian to make the best decisions for your children and to always act in their best interests.
- Set up a Special Needs Trust. For children with special needs, including physical or developmental disabilities, it is worthwhile to consider establishing a Special Needs Trust to pay for the children’s supplemental needs while preserving their right to means-tested government benefits that have strict asset and income eligibility requirements. Such trusts can be excellent resources for children with special needs, paying for their education, transportation, travel, entertainment, social and recreational events, electronic equipment, appliances, and medical expenses that are not covered by Medicaid.
If you have any questions about ensuring that your children and spouses are properly cared for, contact an experienced New York estate planning attorney Leonid Mikityanskiy at our Brooklyn, NY office at (718) 256-3210.
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