Some people leave money to people even if they don’t care about them, just because they’re related

By James Ward

James Ward

We frequently discuss whether a 20- or 25-year-old child or grandchild can handle their inheritance prudently. Do they have the necessary “financial maturity” to not squander it?

I recently had an elder client who felt like they were on the door of death, but the heirs were only 18 and 20 years old and would inherit a little more than $10 million. The elder was very concerned, but the 20-year-old insisted they could handle it all on their own, and argued against anyone else controlling their funds until they had a bit more maturity. That’s understandable from the viewpoint of the youths, but is it reasonable? Will that money disappear without the kids getting any long-term benefit?

Is 25 old enough? What about 30?  What about 55 or 60?

I had a recent case with three adult children between the ages of 55 and 65 years old. One was on disability and the parents had established a Supplemental Needs Trust to protect her, but there were two others who also should have been protected by special trusts due to years and years of either drug abuse or alcohol abuse — or both. They were each set to inherit a lot of money. One knew he needed help to manage it and protect his future, but the other was adamant there wasn’t a problem with her getting all the money right now!

In most cases, the estate planning attorney doesn’t know the clients very well, and almost certainly doesn’t know the clients’ children. The attorney’s job is to get the clients talking about it and find out whether the client thinks any of the beneficiaries need to have a third-party Trustee to protect the beneficiaries from losing out on the benefit they could have had with their inheritance.

It was like the one couple who came to see me and wanted their son to be able to make decisions for them, but upon further discussion, it came out the son had been a drug addict for years and had now been “clean” for all of six months, and then it later came out the son is currently incarcerated. How could he possibly help the parents while he’s behind bars? Was he the right one to be appointed to take responsibility? Not while he’s still in prison.

In another case, a widow left money equally to her four children, but her son was still in prison when the mother died. The son was upset he didn’t get all of his money, but at least it cleared his debt. Ha! The prison, of course, opened his mail and saw he had inherited money, so the state took the lion’s share of the funds to pay off his substantial debt of back child support from decades earlier.

Some people leave money to people even if they don’t care about them, just because they’re related. But if you’re planning to leave money to someone you’d like to benefit from, give some thought to how you should leave it to them, and who might be able to oversee the distributions so it doesn’t get squandered.