Estate planning trust no one child to do the right thing with your assets
Are you giving all of your assets to one child with the understanding that they'll know what to do and they'll know who to give stuff to? Well by the end of today's video, you might have a better idea of why not to do that.
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One of the most difficult things for some people to decide is how to distribute their assets. In other words, who gets their items? Who gets their money, their house, their cars, et cetera? Unfortunately several times a year, we have people come into our office who tell us that they have talked to a son or a daughter or a niece or nephew and they understand what they wanna do. So they want me to draft a last will or a trust where that son, daughter, niece, nephew, whoever it is, gets all of their stuff, all of their assets and the understanding that the person in my office has with this niece, nephew, son, daughter is that they know who should get what.
Can you see the danger of doing things this way? Giving one person the power to distribute all of your assets to who they think should be getting those assets. It's not their decision, guys. It's your decision. And even though you've had a long conversation and they know how you want things distributed, once you pass away, they can do anything they want to if you give everything to them. Do you see what I mean?
For example, let's say you had three children, Enrique, Joseph and Sally. For whatever reason, you trust Enrique more than any of your other two children, Joseph or Sally. And so what you have decided is you have sat down with Enrique and you have had a long discussion with him on how you want your assets distributed, that you're gonna give everything to him and he can distribute them according to that conversation that you had with him. Sounds like a great idea, right?
Well here's the problem. Once you pass away, all of your assets, if that's what you have done, go to Enrique. That means if you had money in the bank, it goes to Enrique. If you had a house, it goes to Enrique. If you had cars, it goes to Enrique. If you had investments, it goes to Enrique.
Now I know what you're thinking. Well we had a conversation. He knows to sell the house and distribute it between Sally and Joseph. Well have you thought about the tax implications that there might be for Enrique? Have you thought about what if Enrique gets married or what if he gets divorced and that wife decides that she wants part of those assets because well Enrique just put everything into one bank account and it became part of the marital estate. So now that wife or soon to be ex-wife might have a right to 50% of all of your assets because you trusted Enrique to distribute your assets the way you had talked about in that conversation with him many years ago.
Two things can happen when you pass away. One is things could change for Enrique. He could lose his job, he could get married, he could get divorced, he could have another child and all of a sudden that money that he was supposed to distribute to everybody else, he thinks well why should I. And you know what? If that's the way you've written your last will or your trust, giving everything to Enrique, well guess what? It's his. It's not Joseph and Sally's. It belongs 100% to Enrique to do whatever he wants to do with it.
Another thing that could happen is shortly after you pass away, Enrique passes away. Well all of your assets because they were written in your will or your trust now go to Enrique's estate and they will be divided according to the terms of his estate, whether he had a will, a trust or intestate succession. That's his estate. So again, 100% completely leaving out your other two siblings, Joseph and Sally.
I hope you can see how dangerous it is even if you have the best intentions in the world to leave all of your assets to one child. Instead what you need to do is sit down and think about it. If you have talked to that one son or daughter, if you talked to Enrique and told him this is how you want your estate distributed, well, guys, you've done half the work. Then tell us how you want it distributed and we will put that into the last will or the trust so that your assets are distributed the way you want them distributed and you don't put it all on Enrique's back.
Remember, once your assets are distributed to Enrique either under the terms of your Last Will and Testament or your revocable trust, they belong to Enrique and you no longer have control. Well you don't have control anyway because you passed away, but you have zero control over what Enrique can do with those assets and he can do them whatever he wants, no matter how much he promised you he would do the right thing. And he can do anything he wants with those assets, no matter how many conversations you guys had about it and no matter how many times he promised you that he would do the right thing.
Those assets belong to him.
I know I've thrown a lot at you today so that's why we've prepared our free guide on estate planning. I'll put a link to it in the description below and in the comment section below that so that you can download it and get started in the right direction. And to help you out even more, watch this video up here and this video up here. If you enjoyed this video, then, guys, please smash that subscribe button and click on the like button and also click on that little bell so you'll get notified every time we post a new video. Have a great day and an awesome week and as always, thanks for watching.