As we make our way through the first part of the holiday season, many of us are reminded that as much as we love our families, they can be complicated. Even in the most harmonious of clans, disagreements can arise or a crisis can strike, causing the dynamics to alter. These issues may impact an estate plan, particularly when the conditions call into question the gifts that have been previously designated to a family member who may no longer be a responsible or grateful recipient.
The hard truth is that only legally married spouses have an absolute right to possess a portion of an estate. Children, grandchildren, nieces, nephews, siblings, and others only hold the hope of an inheritance. Of course, there are default distribution schemes prescribed by the state that could result in unaccounted-for assets being left to one of those individuals even if they are not in the will. But for the most part a complete estate plan that encompasses all assets must seriously consider each gift and bequest and who the beneficiary is.
One situation where this can arise is when a family member is in financial trouble over an issue like a gambling problem or substance abuse. These types of personal struggles may subside for a while or dissipate completely with proper treatment, but it can be difficult for parents or grandparents to predict the future. In those cases, it may be helpful to consider restructuring an estate plan to put more restrictions on a gift, or to name a sibling or trusted friend to oversee a trust, rather to distribute an outright gift.
Source: NWI Times, “Estate Planning: When a loved one’s faults need to be recognized,” Christopher W. Yugo, Nov. 26, 2013.