Even if you've created an estate plan, are you sure you included everything you need to? There are certain provisions that pe...Read more
Accounting for Gifts and Loans to Children in Your Estate Plan
- May 26th, 2009
No parents want their children to fight among themselves after they are gone. Sadly, conflicts often arise, especially when a parent has gifted or loaned money to one child and not others. However, a few key words in your estate plan can minimize the potential for conflict.
If you give money to one child, the other siblings may claim that the child should receive a reduced share of your estate. Speaking at a recent meeting of the National Academy of Elder Law Attorneys, Tim O'Sullivan, an attorney from Wichita, Kansas, who has written and spoken extensively on the issue of family harmony, said he recommends that his clients make their intent clear in their estate planning documents. For example, the document could state that you are not making any adjustments based on gifts. This would make it clear to everyone that no one should receive a reduced share. Alternatively, you could specify the gifts that have been made and explain why one child is receiving a reduced share.
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Felinton Elder Law & Estate Planning Centers
Mindy Felinton concentrates in the areas of Medicaid planning, Veterans' Benefits, asset protection, nursing home planning, elder law, wills, estate planning, trusts, living wills, powers of attorney, probate administration and trust administration and began her legal career 30 years ago as an Assistant State Attorney...
The Law Firm of Evan H. Farr, P.C.
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Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...
Loans are another problem. O'Sullivan says loans can be addressed in a number of ways, depending on your intent. Verbal loans are difficult to prove, so O'Sullivan recommends including a provision in your estate planning documents stating that all verbal loans are a gift. If you have any outstanding verbal loans that you don't want to be a gift, then make sure you put these in writing. If you want the loan to be an advance against inheritance, this can also be specified in your estate planning documents. To avoid a child claiming the loan was forgiven, you can require that the forgiveness be in writing.
The important thing is to make sure your estate planning documents clearly convey your intent. Be sure to consult your attorney to ensure your documents provide guidance you want regarding gifts and loans.
Last Modified: 05/26/2009