When a child turns 18 in the United States, they become a legal adult and gain many rights, freedoms, and responsibilities. They can vote, join the military, sign legal contracts, get married, open checking accounts, change their name, serve jury duty, buy a house, and more. There are a few things 18-year-olds can’t do until they turn 21, such as legally buy alcohol, cigarettes, or a handgun, or rent a car. And as an adult, in the eyes of the law, they can inherit assets if the governing will or beneficiary designation says so. But, as a parent, would you want to hand your 18-year-old that much money to do with whatever they want?
Some of you are vigorously shaking your head no, absolutely not, knowing your kid (let’s face it, they are still a kid to you) would not have the first notion as to how to manage that amount of cash responsibly. A few of you may have a very mature 18-year-old and would be comfortable knowing all would be well. I’m thinking very few of you.
So, if you have a will that assumes you’ll live until your children are well into their middle years, I say, please don’t assume. Estate planning is all about planning for the expected and unexpected. So expect to live a long life, but plan for a shorter one. There are relatively easy ways to handle this situation; for example, consider a trust where you specify that your child receives assets at a later age, say 21 or 25. Or set up a phased approach, where the child receives it in phases over several years.
Or you can designate a trustee to manage the assets and make distributions as needed for education, health, etc., rather than handing over everything at once or at designated ages.
What does your will say? Right now? Do you have children who are approaching age 18? Do you have a trust to manage the assets? These are all things we can discuss in a meeting to ensure your will or estate plan doesn’t accidentally hand your hard-earned assets to your “just became a legal adult.” I think a lot of parents wisely would never do that intentionally, so let’s make sure it doesn’t happen unintentionally. Call me at 513-399-7526 to set up a meeting so we can cover this issue and others together. Or feel free to visit my website, www.davidlefton.com, for more information.