Comedy king, Academy Award winning actor and father, Robin Williams, committed suicide last month. Williams was very wealthy, grossing millions from his long running entertainment career. He was married and divorced numerous times and had three children, ages 22, 25 and 31, from different relationships, whom he wanted to make sure he provided for in the event of his death. In order to accomplish this goal, it seems that Williams may have utilized a trust in his estate plan.
Just as Williams did, it is important to consider a number of factors before determining the best way to distribute your assets to your children, especially if you plan on handing down considerable wealth.
One factor to contemplate is the best time to distribute your wealth to your children: before or after your death? If you distribute some or all of your assets while you are alive, you and your loved ones could reap a number of benefits. One advantage is that you will still be around to influence your children’s financial decisions. After witnessing their behavior you will be better able to make future decisions about distributing your wealth. You beneficiaries will also get a tax benefit from a transfer while you are alive as their distribution will not be subject to estate taxes. By transferring wealth while you are alive, you can also be sure that children from past relationships inherit. If you choose to distribute your wealth after your death you will not have to worry about leaving yourself with too little assets. But, your children could be hit with considerable estate taxes and you will also be unable to influence how they use their inheritance unless it is placed in a trust for their benefit with specific restrictions.
Another factor worthy of consideration is how your children will receive their distributions. Do you want to place certain restrictions on their inheritances or give them the entire sum outright? Of course, this depends of the situation. If you consider your child or children irresponsible or want to provide for a child with special needs, you will have to restrict their distributions in some way. Even if you have "Grade A" beneficiaries, your children may still be subject to the "incidents of life", i.e., a car accident, divorce, business dispute, etc., that results in a claim against the beneficiary. In this event, the inheritance could be lost to the child's creditors. In this case, it may be helpful to leave the inheritance under the protection of your trust. You can do this by implementing specific trust terms (such as only paying out the income of the trust and not the principal) and/or by the appointment of a trustee to make distributions.
There are many other considerations when thinking about distributing your wealth to your children. As in Robin William’s case, these decisions are complex and often difficult. Therefore, you should consult with a qualified estate planning attorney when formulating a plan. If you are in the Las Vegas, Nevada area contact attorney Craig Stone at (877)905-0890 for a consultation today.