When leaving an inheritance to a family member in New York, you must set up the appropriate estate planning and probate parameters to ensure the wealth transition goes smoothly. You can use three options if you’re doing so with adult children. These include breaking up the payments, paying in a single lump sum or using a discretionary lifetime trust.
Should you pay an inheritance in a lump sum?
One of the easiest ways to transition your wealth and assets to an adult family member is by using a lump sum. After your taxes and final bills are paid, they receive the remainder. However, utilizing this choice may not be the best option if you’re giving your wealth to one or more individuals who are poor money managers. Providing a lump sum payment to a family member may also leave them with less money in the future if a divorce occurs. With these scenarios lurking, it’s essential to look at other options.
Can you stagger inheritance payments?
To avoid the repercussions of poor money management when you transfer an inheritance to an adult loved one is to stagger the inheritance payments they receive. For example, they might receive 50 percent if they earn a college degree and the balance when they reach the age of 30. However, it’s best not to be too strict or unreasonable when imposing restrictions. Otherwise, the beneficiary may use a legal challenge to get the inheritance sooner.
Using a discretionary lifetime trust
A third option for estate planning and probate is to leave the inheritance in a discretionary lifetime trust, which leaves the distribution of your estate up to the trustee’s discretion. Going this route can help protect the inheritance from lawsuits or divorces.
If you know your options when leaving an inheritance, you can make the best decision. Using the appropriate one must be based on your situation.