According to estateplanning.com, there are a few options on how to leave assets to your children in your Last and Will and Testament.
One option is to give your children some of their inheritance while you are still living. This allows you to enjoy watching your gift be used in paying for education, starting a business or purchasing a home. It is important to remember that Medicaid will penalize you for any gifts made 5 years prior to applying for benefits so do not make any gifts without careful consideration and expert advice.
Another option is to leave assets upon your death in a lump sum to your children. However, once your children receive their inheritance, it could be lost to creditors. Also, if your child is irresponsible, it may be squandered. A lump sum may not be a good choice depending on your family.
One method to provide for an irresponsible child is through installments of their inheritance. Installments can be made at certain intervals such as a fraction of the money every five years. This gives a child a better opportunity to handle their inheritance wisely.
The final option is to keep assets in a trust. Assets in a trust are protected from creditors, lawsuits and divorce proceedings. The trust can also provide for a special needs child without jeopardizing government benefits. A trust can match the income a child earns as an incentive for them to earn a living. A trust provides numerous options and flexibility to provide for your family’s unique situation.
While a trust provides the most security and flexibility with an inheritance every family is unique. It is important not to make a decision without carefully discussing your family and objectives with a qualified estate planning attorney.