
When should your children receive their inheritance? Consider these factors.
Deciding when your children should receive their inheritance can be just as important as deciding what they will inherit. Every family is different, and what works for one child or circumstance may not be ideal for another. While there is no one-size-fits-all solution, understanding your options and weighing the pros and cons of each can help you make a decision that aligns with your values and your family’s needs.
If you are preparing your estate plan, your attorney at The Millman Law Group can help you navigate your options. Here are three common approaches to timing an inheritance and essential factors to consider for each.
Inheritance Upon Your Death
For many families, the most straightforward choice is to have children receive their full inheritance upon the death of the parent(s). This often makes for a simple and efficient transfer of assets, particularly for those with modest estates. In this scenario, your will or trust specifies how assets should be distributed once your estate is settled.
Advantages:
- Direct and straightforward process for distributing assets
- There is no need to manage ongoing trust distributions
- Suitable for heirs who are financially responsible and mature
Considerations:
- Heirs may face tax liabilities, especially in larger estates subject to federal estate taxes.
- If your children are young or lack financial maturity, an outright distribution may not serve them well.
- Without a trust, assets may go through probate, potentially causing delays and added costs.
For many parents, this option works well if their children are older and can manage an inheritance responsibly or if the estate is not large enough to trigger significant tax consequences.
Gradual Distribution Through a Trust
Establishing a trust allows you to control how and when your children receive their inheritance. Rather than a lump-sum distribution, you can schedule payments over time or tie them to specific milestones. For example, you might direct that a child receives one-third of their inheritance at age 25, another portion at 30, and the remainder at 35. Or you can link distributions to life events, such as completing higher education, buying a home, or starting a family.
Advantages:
- Helps protect beneficiaries from poor financial decisions at a young age
- Can protect against creditors, lawsuits, divorce, and bankruptcy
- It avoids probate, ensuring a smoother and more private transfer of assets
- Allows flexibility for your children’s life stages and changing needs
Considerations:
- Requires more upfront planning and ongoing trust administration
- May incur trustee fees if a professional trustee is used
A trust can be an excellent choice for families where children are still inexperienced with money or when the goal is to preserve wealth across multiple generations.
Lifetime Gifts While You Are Alive
Some parents give their children all or part of their inheritance while the parents are still alive. Lifetime gifting can be deeply rewarding—you get to witness your children benefit from the gift, and you can provide support when it may be most needed (such as helping them buy a home or start a business).
Advantages:
- You can see your children enjoy the inheritance and offer guidance as they manage it
- It may reduce the size of your taxable estate, potentially lowering estate tax exposure
- Allows for more flexible and personal timing of gifts
Considerations:
- Requires careful planning to ensure you do not jeopardize your own financial security
- Annual gift tax limits apply, so significant lifetime gifting should be coordinated with professional guidance
This approach is often used by parents who are financially secure and want to provide meaningful assistance to their children earlier in life when the money may have a greater impact.
Working with an experienced estate planning attorney at The Millman Law Group can help you evaluate your options and design a strategy that protects your legacy while supporting your children’s future.
Estate Planning Made Easy With Millman Law Group
Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs Trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.