Gifts and loans may spell trouble in estate planning

Posted by Angela Holliday Hansen Esq. | Aug 20, 2014 | 0 Comments

It is an unfortunate fact that a person's heirs may fight when it comes to who gets what after a loved one's death. This can be especially true if one child was given a gift or a loan prior to their parent's passing away.

Parents in Maryland may have good intentions when loaning their child money. After all, they want to help their children in a time of need. However, verbal loans can present a myriad of problems. To avoid conflict it is good to address loans in one's estate plan. One option is for the parent to include a clause in their estate plan indicating that verbal loans are meant to be part of their child's inheritance. On the other hand, parents may want to include a clause in their written estate plan explaining that any verbal loans distributed in the creator's lifetime are to be considered gifts.

That being said, gifts can also present an issue. Are they meant to be a part of a child's inheritance or aren't they? If this issue isn't clearly addressed, fights among siblings could break out and any estate planning documents could be contested, lengthening the time it takes to settle one's estate after their death.

Depending on the situation, parents may want to include a clause in their estate plan explaining that gifts are either meant to be a part of the child's inheritance or not meant to be part of the child's inheritance. Doing so can avoid arguments surrounding whether a child should be given a smaller share of their inheritance because they received a gift during their parent's lifetime.

In the end, communication is the key to successful estate planning. When one's heirs and beneficiaries know what to expect, it could prevent problems that take a long time to resolve after their parent's death. By making one's intentions clear, an estate plan can be made that distributes a parent's assets to their children in a fair manner.

About the Author

Angela Holliday Hansen Esq.

Angela Holliday Hansen, Esq., is a former big firm corporate attorney who now practices family law in Rockville Maryland. Ms. Hansen oversees complex estate administration and drafts...

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Suite 106

Rockville, MD 20850
301-690-0383
Mon, Tue, Wed, Thu, Fri: 09:00am - 05:00pm

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