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Estate Planning for Parents & Grandparents

Jun 16, 2018 9:30:00 AM The MacMillan Estate Planning Team Estate Planning, family estate planning, family inheritance, inheritance trusts


At MacMillan Estate Planning, we have the privilege of working with many well off families. For our clients, the key concern is often to ensure that their wealth stays within their family. They wish to leave generous inheritances to their children and grandchildren, and they don’t want the money to be at risk. We can help.

Protecting Your Children’s Inheritance. The good news it that divorce rates are falling. In the US, Canada, and UK, we are seeing divorce rates hitting lows that we haven’t seen since the 70s. Well-educated spouses who are well off have even lower rates than lower class couples. The bad news is that around 40% of couples still get divorced. Fortunately, you don’t need to worry about snubbing your in-laws when planning your estate.

An inheritance trust not only protects the assets you leave to your child from divorce, but it also shields them from creditors. This means the assets you leave your child are safe even if they get sued, have a major medical problem, or lose their business and have to file for bankruptcy. When discussing your plans with your child and their spouse, you simply don’t have to mention that the trust will also prevent your in-law from seizing any assets if they divorce your child.

Securing Your Bloodline. Another worry many seniors have is how to ensure their assets stay within the family. As you probably know, wives statistically outlive their husbands. So if you leave $250,000 to your son directly, there’s a good chance that money will eventually pass on to your daughter-in-law after he passes away. At that point, she can do with the money as she wants.

Fortunately, an inheritance trust can help here as well. While your son is alive, he can use the assets in the trust as he wishes. But as the creator of the trust, you can decide what happens to any remaining assets after he passes away. Typically, the remaining assets are divided among your grandchildren. Our estate planners will work with you to create a plan that honours your wishes.

The Ability to Do Anything, but Not the Ability to Do Nothing. One idea that comes up frequently from our clients is they want to provide enough wealth that their grandchildren can do or accomplish anything — but not so much that they can just do nothing for the rest of their lives. That can be a tricky balance, but we have worked with many families who have found the right solution for their grandchildren.

Trusts are likely going to be the key tool once again. In this case, the trust can be handled by one of your grandchild’s parents or by a trustee, and the assets will be held in trust for your grandchild. When you create the trust, you can list events that will trigger the release of funds. For example, when your grandchild graduates high school and is accepted into a post-secondary institution, the trust could distribute $10,000 to them. Every year that they pass their classes and continue their studies, they could receive an additional $10,000. Other common events that would trigger a release of a predetermined amount of money are getting married or buying a home.

Beyond reaching certain milestones, many trusts also have age-triggers. A common set up is to have the beneficiary inherit 30% of the wealth when they turn 25, another 30% when they turn 30, and rest of it when they reach 35. Of course, this will depend on how large the inheritance is. You may decide that a twenty-five year old will likely not be mature enough to inherit even a third of the millions you’ve left them. Prince Harry and Prince William, for example, each inherited £10 million from a trust created by their late-mother, Princess Diana, on their 30th birthdays respectively.

When it comes to your personalized estate plan, there are often a few more considerations than you first think. Our advisors discuss your wishes and priorities, so we can guide you away from potential challenges and ensure the outcomes you want. Contact our advisors today at (403) 266-6464, and schedule your free consultation.

At MacMillan Estate Planning, our team of professional trust and estate practitioners, chartered accountants, financial planners, and legal professionals look forward to assisting you with the design of your estate plan and will ensure you build, protect, and enjoy your wealth. The information provided is general and may not be suited to your objectives or sufficient to ensure the protection of you and your family. You should not act on this information without providing MacMillan Estate Planning with the opportunity to ensure that it is suitable for your unique situation.

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