How much control do you want to exercise over your children and their inheritance after you die?
As macabre as it sounds, people often want their “dead hands” reaching up from the grave, manipulating what their offspring can do. But how much control should you exercise, and how much is too much?
Estate planners often advise clients that they should not exhibit too much control over their beneficiaries after they have died. It could lead to more problems. After all, you do not know how your future descendants will turn out. They may wind up being perfectly nice and well-balanced people who are financially responsible, instead of the cast of characters from the Rocky Horror Picture Show who show up to your Thanksgiving table every year bringing “hangers on” and “ne’er do wells” with them. If your future heirs turn out all right, why tie their hands? Why not let them have control over their inheritance?
There are a lot of situations, however, where the deceased is likely “rolling over in his grave” from the actions of his living children, and wishes he could exhibit control from the beyond. You know the drill: the kids end up fighting, one sues the other and your hard earned money gets depleted on legal fees. If you are concerned that this scenario could play out in your family, you should be controlling your heir’s inheritance from the grave. Here is how you do it:
- Plan for the worst: If you think a child will be difficult in administering your trust or estate, she probably will be. Plan for the worst because it will probably happen. Do not hope that she will finally behave properly after you die. Your death will probably just exacerbate her behavior.
- Bring in a professional: If you cannot find anyone to serve as the executor or trustee, this is a red flag. It means one of your kids is a crazed troublemaker and everyone knows it. If your friends and family do not want to serve in these fiduciary roles, hire a professional advisor or trust company to manage your estate instead. Hiring a professional fiduciary may cost a little bit more, but in the long run it will save you in legal fees. Professionals are used to dealing with difficult beneficiaries. They will know how to handle your offspring who are causing the problems.
- Include no contest clauses: Make sure your estate planning documents are drafted with no contest clauses. That way if your troublemaker child disputes your will or trust, he will be cut out completely. Many beneficiaries will keep quiet rather than risk losing their inheritance.
- Avoid probate: If all of your assets are in a trust or pass by beneficiary designation, you will not need to probate the will. This will keep the estate out of the courts, giving the disgruntled heir less of an opportunity to contest. Any time you need to go into court and give notice to your heirs, you open the door for a will contest.
- Reduce control: Your documents should be drafted so that the troublemaker has as little control as possible over the administration of your trust and estate. This includes how distributions are made, whether or not assets are sold or distributed as is and naming successor trustees. Reducing or eliminating the ability she has to influence decisions will make the process smoother.
- Disinherit the difficult child: When all else fails, you can cut the difficult child out of your estate plan completely. Although do consider giving her a sufficient amount of cash so that she will not contest the estate plan, and be sure to include a no contest clause.
You may not actually be able to reach your dead hands up from the grave, but you can certainly give your children the impression that you are. This planning is not for everyone, but in some situations it can be an essential tool for protecting your children from themselves. There is nothing scary about that.
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