If you’re like most parents, you probably like to keep your teens on a “need to know basis”—especially when it comes to your finances and the details of your estate.
But even if your kids don’t know the exact details of your estate and just how much money they would inherit if you passed away, they probably have some idea about who they would live with and that they would receive at least some of your assets if the unthinkable happened.
Now you may think this is enough information for your minor children. But in my experience, I’ve learned that having an open discussion with your teen can prevent them from being angry or confused if you decide that he or she will have to wait until their 20’s or 30’s to receive their inheritance.
It would only take a quick Google search for your teen to find out that by law an inheritance is distributed at the age of 18, unless the parent sets up a trust that specifies a different age.
As you can imagine, if your teen discovers this information and then learns you have made them wait, they might get the wrong idea and feel that you made the decision because you did not trust him or her. And because you are not there to defend your decision, the teen could be upset and confused.
We see this happen a lot and that’s why I believe the best way to avoid this anger or confusion is to sit down and have a frank discussion with your teen.
Here are some things I would suggest talking about:
- A ballpark of the amount of money that your child is set to inherit
- The age you feel is appropriate for the inheritance and why you have made this decision
- How you want the money to be spent, for example on college or the down payment of a house.
- Whether or not you have placed other stipulations on the money besides their age. For example, you can set it up so that the teen can receive the money at any age, as long as he or she has graduated from college.
I’ll be the first to admit that these are not the most comfortable conversations to have with your teen, but doing what you can to eliminate surprises from your estate plan will make things much easier on your kids if you should unexpectedly pass away.
And of course if you as a parent now have questions about how to delay any inheritance your child would receive at the tender age of 18, be sure to give our Newport Beach estate planning office a call at (949) 260-1400 and ask if you qualify for a Family Wealth Planning Session ($750 value) so we can help you work through these tough decisions.