My Children Are Adults. Do I Still Need an Estate Plan?

When children are young, the need for estate planning can seem obvious.  Parents want to name guardians, provide financially for their children, and make sure someone they trust will manage an inheritance until the children are old enough to handle it themselves.

But what happens when the children grow up?

It is easy to assume that estate planning becomes less important once your children are independent adults.  In many ways, the opposite may be true.  Your children may no longer need guardians, but your family, finances, and planning objectives may have become considerably more complicated.

October is National Estate Planning Awareness Month, making it an appropriate time to consider whether your estate plan still reflects the needs of your family today.

Estate Planning Is About More Than Minor Children

An estate plan does much more than provide for children.

It determines who will receive your property, who will administer your estate, who can manage your financial affairs if you become incapacitated, and who can make health care decisions if you cannot make them yourself.

If you do not have an estate plan, New York law will determine how property passing through your estate is distributed.  Those rules may produce a result that differs from what you would have chosen.

Even if you want your children to inherit everything equally, an estate plan allows you to decide how and when they receive their inheritances and who will be responsible for administering your affairs.

Should Every Child Receive an Inheritance Outright?

Once children become adults, parents often assume that an inheritance should simply be distributed to them outright.

That may be appropriate.  But it is not the only option.

An adult child may be financially responsible and successful but still benefit from receiving an inheritance in trust.  A properly designed trust may provide protection from creditors, preserve assets in the event of a divorce, and protect an inheritance from poor financial decisions or other circumstances.

For some families, the concerns are more immediate.  An adult child may have difficulty managing money, suffer creditors, be in a bad relationship, struggle with addiction, receive means-tested government benefits, or have other circumstances that make an outright inheritance inappropriate.

Estate planning allows you to design a plan around the beneficiary rather than simply distributing assets because the beneficiary has reached a particular age.

What if Your Children Have Families of Their Own?

Adult children frequently have spouses and children of their own.  That creates additional planning questions.

If one of your children dies before you, should that child’s share pass to his or her children?  Should it pass to your surviving children?  Should a son-in-law or daughter-in-law receive anything?

There is no universally correct answer.

The important point is that you should make the decision rather than leave the result to default provisions of law or an outdated estate plan prepared before your family changed.

Grandchildren may also create opportunities for longer-term trust planning.  You may want an inheritance to remain available for a child’s benefit during that child’s lifetime and then pass to your grandchildren.  A thoughtfully drafted plan can accomplish that while providing flexibility for changing family circumstances.

Your Adult Children May Now Be the People You Want in Charge

When your estate plan was originally prepared, your children may have been too young to serve in positions of responsibility.

That may no longer be true.

You may now want an adult child to serve as your Executor, Trustee, agent under your Power of Attorney, or health care agent.  Alternatively, you may have named a sibling, friend, or other relative years ago because your children were young, and that appointment may no longer make sense.

Estate planning gives you the opportunity to decide not only who receives your property, but also whom you trust to act for you.

Those choices should be reconsidered as your family evolves.

Your Own Incapacity Still Requires Planning

Having responsible adult children does not automatically give them authority to manage your affairs.

New York law may permit family members or other individuals to make certain decisions under particular circumstances.  But those rights are limited and are not a substitute for comprehensive advance planning.

A Power of Attorney allows you to designate the person you want handling financial and legal matters if you cannot manage them yourself.  A Health Care Proxy allows you to choose the person you want making medical decisions if you are unable to make those decisions.

Without appropriate documents, even a capable and devoted adult child may discover that he or she lacks the authority necessary to help you.

Do Your Beneficiary Designations Match Your Estate Plan?

As families mature, retirement accounts, life insurance, investment accounts, and other assets often become an increasingly important part of the estate.

Many of those assets may pass according to beneficiary designations rather than under your Will.

That means updating your Will without reviewing your beneficiary designations may leave you with an estate plan that does not work as intended.

For example, your Will may contain carefully drafted trusts for your children, but an account naming those children directly as beneficiaries may pass to them outright instead.

Estate planning should coordinate your documents, account ownership, and beneficiary designations so that the different parts of your plan work together.

Adult Children Do Not Eliminate the Need for Planning

Your children growing up does not mean that you have outgrown estate planning.  It means that the questions have changed.

At the Law Offices of Jeffrey A. Asher, PC, we help individuals and families create estate plans designed around their current circumstances, assets, and objectives.  We also review existing plans to determine whether documents prepared years ago still accomplish what the client intends today.

During National Estate Planning Awareness Month, consider this question: If your estate plan was created when your children were younger, does it still reflect the family you have today?

If the answer is no, or if you are simply unsure, it may be time to take another look.