Problem Child? What To Know Before Leaving Wealth To A Misbehaving Child
A natural part of parenting is the desire for your children to receive the benefits of your hard work. In some cases, however, leaving wealth to a child can be detrimental to that child's future health and happiness, especially when it allows them to harm themselves. For instance, children who abuse drugs and alcohol, engage in criminal activity or participate in other types of risky behavior are likely to use inherited wealth to escalate these problems. If you would like to prepare your will and make arrangements for your estate, but are unsure of what to do about leaving wealth to a child you are worried about, the following information can help you make the best decisions for both you and your child.
Explaining the Situation Honestly
Before making a permanent decision to disinherit a child who engages in destructive or illegal activity, consider letting them know that their behavior is preventing you from leaving them wealth upon your death. Speak to them frankly and honestly about your decision and let them know that if they agree to change their behavior, you will be open to making alterations to your will if and when they can provide positive proof that they have enacted positive change in their lives.
Encouraging Personal Responsibility Through Stipulations
If, after discussing your position with your child, you feel that they are willing to leave their bad behavior behind, adding stipulations to your will as to how and when they will receive specific portions of wealth may be a good option to consider. One example is to set up a managed trust that will provide for basic needs over their lifetime, providing they agree to certain stipulations. These might include providing proof of continued good behavior, such as periodic drug testing, completing treatment programs or completing educational or career milestones.
Mandating Oversight by a Responsible Third Party
If you decide to leave wealth to a child who engages in destructive or illegal activity, it is always wise to mandate oversight by a responsible third party. When choosing this option, make certain that the person you choose to oversee your child's inheritance is honest and reputable. Good choices are a trusted family attorney, family friend, relative or business associate.
If possible, avoid giving these duties to another of your children, even if they are mature and otherwise well-suited for the task. The misbehaving child is likely to resent their sibling's control of their inheritance, and this resentment could cause an irreparable family rift to occur. For additional guidance on distributing your wealth in a manner that does not harm your children, consider speaking with a reputable financial planning professional who specializes in private wealth management.
