Treating Children Equally in Estate Planning Is a Mistake

For adult children with creditor issues or substance abuse problems leaving them or gifting them money outright is not in their best interests, either. If an adult child with creditor issues inherits outright under the will their inheritance is fair game for creditors. What that means on a practical level is their bank accounts could be swept by creditors looking to recoup unpaid bills. The child with substance abuse issues certainly will not benefit from receiving an inheritance outright. In both of these cases leaving money via a trust is a better alternative.

Gifting to children with substance abuse issues or creditor problems is also a challenge. Unlike your other children it is probably better if you do not gift to them outright. Instead, you can do a variety of things to equalize the situation:

The point is if you give one child $13,000 outright you can still give your child an equivalent economic benefit without giving them the money outright.

Remember treating your children differently does not mean you are treating them unequally or that you love them any less. In fact, treating them differently in order to protect them shows you in fact do love them and are thinking of their best interests.

--by Michael Maye

Michael Maye is the founder and president of MJM Financial Advisors (www.mjmfinadv.com), a registered investment advisory firm in Berkeley Heights, N.J. He is a member of the National Association of Personal Financial Advisors (NAPFA) and has been a speaker covering tax topics at NAPFA's national and regional conferences. Maye has also been a frequent contributor to the Star Ledger of New Jersey's "Biz Brain" and "Get With the Plan" articles. In addition to NAPFA, he is a member of Financial Planning Association, American Institute of Certified Public Accountants, New Jersey State Society of CPAs and the Estate Planning Council of Northern New Jersey.