Creating Incentives for Your Children With Your Estate Planning
As Idaho Estate Planning Attorneys we are often reminded by clients about the need for creating incentives for children who will survive their parents. In some instances, a child or children of our clients have been doted on during their lifetimes by well-meaning parents and, as a result, have not developed any ambitions of their own or the ability to provide for themselves. This happens when a child or children have relied upon their parents for financial help over a long period of time. When this occurs our clients often ask about ways their Idaho Estate Planning could be used to help incentivize these children during their lives to become self-sufficient.
Our Idaho Attorneys have gained experience and knowledge through decades of providing customized Idaho Estate Plans to our clients that can help our clients with their children. Our goal is to create a plan for each client that meets their specific and particular needs. We can help when it comes to providing incentives to children to become self-sufficient. Our partners Randy Budge and Lane Erickson, and our attorneys Nathan Palmer and Dave Bagley achieved the highest ratings from Martindale and Hubbell, AVVO and Justia in estate planning law. We are confident that our team of Lawyers in Idaho can help you, especially when it comes to planning for your children. Here is a short summary of 3 ideas used to create incentives for children through a well-crafted Idaho Estate Plan.1. Opportunity Funding
Opportunity funding is an excellent option that allows a personal representative and/or trustee to actually purchase or buy an opportunity for a child rather than simply giving them a gift of cash or other assets directly when a parent dies. What this simply means is the parent’s personal representative and/or trustee may actually go and purchase a business or a business opportunity for a child. Through a well worded Last Will and Testament or Trust a parent can provide a good deal of discretion for their personal representative and/or trustee on the types of business opportunities that can be purchased for a specific child. The incentive for a child is that the more successful the business is through their hard work, the more assets and money that the child will ultimately earn.
This type of funding often does create a desire in a child to succeed. However, the weakness of this type of funding is that the parent is essentially controlling their child from the grave with regards to the profession or work options the child chooses to follow. Some clients like this option, but some clients reject it because they feel that they are being too controlling with their children.2. Milestone Funding
Another good option for providing an incentive for a child is through what is known as Milestone funding. This type of funding creates or sets up specific milestones that a child can work to achieve. When the milestone is reached or accomplished by the child, a distribution from the parent’s estate would be made directly to that child.
For example, many parents create milestone funding options for children to give them motivation to complete their college education. A parent may provide in Last Will and Testament or Trust that when their child obtains a college degree a distribution will be made directly to that child. Other milestones that parents often choose include marriage, going on a religious mission, starting a business, and/or saving a certain amount of money themselves for a major purchase such as for a home or for a business. A customized Idaho Estate Plan would contain language stating that when any of these milestones are met, a direct distribution or a matching distribution is made to the child in whatever amounts the parent specifies.3. Staggered Funding
In addition to the two options listed above, a third good option that exists for parents who want to provide incentives to their children after they are gone is by what is known as staggered funding. Staggered funding is when a person chooses specific ages for when their child will receive a distribution from their estate. For example, we often have clients who will create a 1/3 staggered funding option where the child will receive one-third of the distribution from a Trust at the ages of 28, 38, and 48. This is just an example of the ages and types of staggered funding that could occur. The ages and number of distributions can be whatever the parent’s set up.
The thinking behind staggered funding is that a child is on their own for a certain period of their life, and must learn to be self-sufficient during this time period. This requires the child to be dependent upon themselves rather than being dependent upon distributions from a parent’s property in order to be productive during their lives. Additionally, because the distribution ages or events are known by the child, the distributions tend to be more like a bonus rather than a dole. Essentially, through staggered funding, the child becomes who they themselves are and will be, without being dependent on their parent’s money or property. Then when the distributions are made, the child can use the funds from the distribution to enhance who they already are, rather than having the distribution define who they will become.Enlist an Idaho Estate Planning Attorney to Help You
The three examples listed above show that there are many options that exist with regards to providing incentives for children through a customized Estate Plan. If you have questions about how to make distributions to your children in a way that helps them, we can help. Our Attorneys in Idaho are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation with the Racine Olson team of Estate Planning attorneys in Idaho. You can also email us directly at firstname.lastname@example.org. We will answer your questions and will help you solve your Idaho Estate Planning problems.