“MY DAUGHTER’S SORRY HUSBAND”
How many times do you hear parents wax poetic about their children’s spouses. It goes both ways, of course. No one is good enough for MY little girl. However, our children grow and marry and have children and have to manage their own affairs.
We watch and counsel and bear with our children as they learn and grow. We observe how they run their family and their finances. In the back of our minds, though, we are hoping to see that they will be fiscally responsible and not need to rely on us. We loan money to them and we try and show them how to budget. All the while, our nest egg grows.
What are we to do when our children or their spouses prove over time that a large inheritance will not only be wasted but may actually harm our children’s relationships and financial well being? How do we leave them wealth with confidence that it will be put to good use?
Estate planning Attorneys hold the tool to enable you to use your wealth for the well being of your children and grandchildren long after your passing. This tool, when used properly protects the earning potential of your wealth and remains separate property in the event of divorce. With proper planning, this tool allows your children access when needed, or for life’s special occasions, but limits abuse and mismanagement by your children.
By know, the reader is probably thinking that I am describing a trust. And the reader is correct. The opening of this article had the purpose of reminding us that our children, even as adults, need us. Some of our children can not be left to themselves when it comes to money. This truth transcends how much wealth we have. Some of us have great children who are simply not great with money. Even smaller amounts of money can be protected and grown to be used for the benefit of our children.
For example, let’s assume that after you have exhausted most of your nest egg and reduced your life insurance you will leave only $50,000.00 to your children. You know that your children make less than this per year, and they struggle every month to pay the car payment and light bill. A trust that invested this amount and earned just 5% year would equate to a little over $208.00 per month. This would pay the light bill of most homes for most of the year forever.
This same $50,000.00 trust could also have provisions to pay deductibles for insurance and co-pays for Doctor visits. Although $200.00 a month plus co pays do not seem like much, they are exactly what young struggling families deal with on a regular basis. But, do our children think of the light bill or the co-pays when the executor hands them a $50,000.00 check?