Communicating Estate Planning Decisions with Adult Children
Often clients ask us to facilitate a discussion with their children about their estate planning. The letter below describes a hypothetical client’s estate plan and the trusts for the children that will be funded after the clients’ deaths. This letter is just an example, and would be customized to fit the specific facts. Please contact us to discuss your own estate planning needs, or email a member of our team by clicking on the links below.
Bob Goldman, Managing Partner
Liz Drake, Partner
Jill Weiner, Senior Attorney
Frank Hannigan, Associate Attorney
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Dear Children:
We have recently updated our estate planning documents, and we wanted to write to give you some context surrounding our choices.
After we both have died, your inheritances are directed to be held in separate trusts for each of you. Our lawyer has explained that the primary benefits of these trusts are (1) assets in trust are protected from any creditor you may face, including a divorcing spouse, and (2) assets in trust are not exposed to estate tax at your later deaths. We wanted to give you the option of these benefits, but we do not intend for the trusts to be burdensome.
The trusts empower each of you in a variety of ways:
1. You each can serve as a co-Trustee of your own trust to participate in investment decisions.
2. To get the benefits of the trust, only an “Independent Trustee” can make distributions to you. Each of you can choose after our deaths who your Independent Trustee will be, and you can choose a friend, family member (but not your own spouse), or a professional advisor of your choice.
3. You can each remove your Independent Trustee from time to time.
4. The Independent Trustee has the broadest discretion to make distributions to you or your children for any purpose. Our lawyer has explained that you would typically meet with the Independent Trustee once a year or so, review the investments, and discuss your needs for the coming year. The Independent Trustee would then automate distributions to your personal account, monthly or quarterly. You would only need to contact the Independent Trustee if you wanted a distribution beyond the automated amount.
5. You can direct, in your own will, where any property remaining in your separate trust will pass at your death. We have not put any limitations on this authority, and you can direct the property to whomever you choose, including your spouse. If you choose not to exercise the authority, the property would continue to be held in trust for your children, and they would be empowered in all the same ways.
After we have died, we recommend that you meet with our lawyers to understand the estate plan and learn about the benefits and the burdens of the continuing trust. If one or both of you would like to take advantage of the trust’s protection, you would keep the trust in place and appoint an Independent Trustee of your choice. And if either or both of you understands the benefits but does not think they are worth the burdens (like dealing with an Independent Trustee, filing a separate income tax return for the trust, and some other complexity), you can appoint an Independent Trustee who will immediately distribute everything out to you and terminate the trust. This doesn’t work in reverse – we couldn’t leave the assets outright to you and let you choose to establish a trust.
We chose to structure our estate plans in this way to give you the maximum possible flexibility, and it is your choice whether to keep the trust in place or to work with an Independent Trustee to terminate the trust. We hope that you will make this decision in an educated and thoughtful way, but the decision is yours to make.
Our estate planning lawyers are at Bob Goldman Law LLP, and their contact information is below:
BOB GOLDMAN LAW LLP
81 Washington Street, Suite 308
Salem, MA 01970
Phone: 978.594.4500
All our love to both of you.
Mom and Dad