How Do I Dissuade My Children From Relying on Inheritance in North Palm Beach?
One of the most common fears for high-net-worth parents is the “curse of inheritance.” The theory is that if you leave your children your fortune, they will become overreliant on your assets without achieving anything or building their own wealth. By the third generation, your wealth could be completely gone. How do you prevent this from happening? Can a North Palm Beach estate planning lawyer help?
Consider a Spendthrift Trust
One obvious solution is a spendthrift trust. A trust with a “spendthrift provision” prevents your adult children from inheriting all of their assets at once. Instead, they will receive gradual, “drip-feed” distributions over time. This approach prevents your children from wasting their inheritance on frivolous purchases, gambling, substance abuse, and so on.
However, this “baseline” income still ensures that they will enjoy a relatively positive standard of living. Most importantly, they will never become destitute. Instead of relying entirely on their spendthrift distributions, most adult children will attempt to increase their wealth through their own labor and entrepreneurship.
Consider a Generation-Skipping Trust
Another option is a generation-skipping trust. As the name implies, this type of trust “skips” your adult children entirely. Instead, the funds will pass to your grandchildren (your children’s children) when they reach a certain age. Because this inheritance will never pass directly to your adult children, they may feel more motivated to better themselves and achieve success through their own hard work.
Your grandchildren can also benefit from your inheritance, perhaps having their college tuition paid. Because this money is preserved and managed by the trustee, it should serve the best interests of your grandchildren. Solid education also helps your grandchildren become self-sufficient and pursue high-paying jobs.
Consider Conditional Bequests
Another option is a conditional bequest. This strategy does not require you to create a trust, and you can simply add “conditions” to the inheritance you leave behind in your Last Will and Testament. For example, you might state that your adult child should only receive their inheritance after completing some kind of milestone, such as earning a bachelor’s degree. You might also state that your adult child should only receive their inheritance after remaining sober for two years.
Note that you can also create these kinds of conditions with a trust. The trust document may contain more detailed and flexible instructions for the trustee, and this may provide greater protection against waste/squandering of wealth. Your estate planning lawyer can help you choose a strategy that matches your family’s unique priorities.
Can a North Palm Beach Estate Planning Lawyer Help Me?
North Palm Beach estate planning lawyers may be able to help you implement strategies to preserve generational wealth and dissuade your adult children from becoming too reliant on their inheritance. This is a valid concern, and statistics show that intergenerational wealth can easily fade away faster than many realize. Contact Kitroser Lewis & Mighdoll at 561-721-0600 to continue this conversation.
Source:
leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0502.html
