The arrival of a new family member can make you feel like anything is possible. As you enjoy the precious moments, months, or years of taking care of a child, it’s easy to forget that they may not get the same care after you’re gone. Unfortunately, many children are in this position, suffering unintentional disinheritance simply because of outdated or limiting language in an estate plan.
Updating Your Estate Plan After a New Addition to the Family
In the past, estate planning documents contained catch-all phrases such as “my heirs” or “my descendants.” This might be straightforward in family units with one wife, one husband, and their biological children, but these types of families are becoming increasingly rare. Many couples today have children without getting married, have children from multiple marriages, or have children through “non-traditional” means.
If your family is about to get bigger, your estate plan should contain language that includes rather than excludes new heirs, such as:
- Newborns. While they are considered direct descendants, there are still a few planning considerations for biological children. If you created your will when you had only one child, you might need to make changes to include multiple children and provide clear instructions on how much of your estate each one will inherit.
- Adoption and stepchildren. Over 4 million children nationwide are living with a parent who is not biologically related to them. If your family includes both biological and adopted siblings, the language in your plan must leave no doubt about each child’s right to inherit.
- Grandchildren. If you have children from a first and second marriage, you could have grandchildren from both spouses. If your will simply uses the term “grandchildren,” the probate court may assume you want to provide for each grandchild equally.
Factors to Consider as Your Family Unit Grows
The ways to provide for (or exclude) heirs can be as wide and varied as each person’s family unit. That’s why the legal team at Yolofsky Law test drives each of our clients’ plans to make sure your wishes are respected every step of the way.
When revising your estate plan to include new children, you should be mindful of:
- Guardianship. Just as you have appointed someone to make decisions for you if you are incapacitated, you should designate someone who will take care of your children if anything happens to you. You should be as thorough in your designation as possible, especially if you have multiple children and you do not want them separated into different households. Making this designation now is vital to preventing in-laws, former spouses, and others from fighting over custody of your children.
- Unequal shares. In a recent BMO Wealth Institute survey, 40% of beneficiaries felt that their parents’ estate plan did not distribute wealth and assets fairly. While it’s your right to leave your children unequal shares, it’s best to state the reasons for the inequality and acknowledge that it was done deliberately. For example, one child may be named sole beneficiary on a life insurance policy because she requires more care than the others.
- Sentimental assets. If a mother had multiple children, which one gets her engagement ring? Who will inherit classic cars or valuable antiques? If there are special assets that cannot be divided equally, it’s best to name the person who will receive each personal effect and the reason why. It’s also a good idea to share these decisions with your heirs during your lifetime to avoid any surprises later.
- Ownership. When emotions and the value of the estate run high, it will take airtight planning to avoid litigation after your passing. If you fear that your family members will not be able to get along, it might be best to hold your assets in a family trust instead of distributing them outright. The terms of the trust may dictate how to handle disputes and who will act as an independent trustee, avoiding any “bad blood” between relatives.
- Corporate shares. If you own and operate a family business, you may want to consider whether your children will become a part of the business when they come of age. If they join the business, will they become shareholders, employees, or both? What duties and compensation will they have? If they choose not to go into the family business, do they have the ability to opt out? Answering these questions now can prevent legal disputes among multiple children after your passing.
Let Us Be Your Trusted Advisor
At Yolofsky Law, our Florida estate planning team can explain your options and help you protect what matters most. Give us a call today or download our free estate planning guide, Be a Hero to Your Family.