The nine-year-old daughter of the late actor Dennis Hopper is expected to receive about 40 percent of the late actor’s estate — an estimated $2.85 million. Hopper’s adult children will split the remaining 60 percent of the estate, most likely because Hopper had already paid for their education and upbringing. Galen Hopper’s mother (Dennis’ ex-wife) will be a co-trustee of his daughter’s estate and Galen will have access to different amounts of money at various ages.
We never plan to leave young children behind, but it’s always smart to plan ahead when it comes to your estate.
Taking Care of Your Kids Without Spoiling Them
Most parents plan to leave enough for their kids to provide for their needs, and of course we all agree this is noble; however, we’ve all heard the horror stories of over-privileged child heirs who waste their days partying and doing drugs, often ending up in jail. There are also tales of families ripped apart by arguments over family estates. Warren Buffet has been known to say that wealthy parents should leave their children with enough money to do anything they want but not so much that they are doomed to do nothing at all.
While leaving too much for your kids can rob them the joy of making their own financial success, it is obviously the duty of a parent to provide for a child’s basic needs. Bill Gates — one of the richest men on the planet, whose charity foundation received quite a hefty donation from Warren Buffet himself — said that while his kids’ education and medical needs will always be paid for, he expects his kids to “pick a job they like and go to work.” Gates plans to leave most of his wealth to charity, bestowing a “small” portion (rumored to be less than $10 million per child) to the kids.
Are Your Kids Ready for Your Money?
Bill Gates isn’t the only billionaire who wants his kids to make their way in the world; many parents are worried about leaving their wealth to kids who don’t know how to handle money. Gine Rinehart, an Australian mining billionaire (who herself inherited the empire from her father), has shut her kids out of ownership stakes in the company, saying she wants the kids to get jobs and learn to work. Rinehart isn’t alone, either; many wealthy baby boomers are reportedly cutting their kids out of their wills, due to the fact that their kids who have never had to work are incapable of handling wealth. At the very least, it is probably a good idea to talk to your kids about the wealth they will inherit and teach them about handling money.
Tips for Estate Planning
Leaving money to your children in a will isn’t enough. For minor children, having a trustee to manage your child’s assets is essential. You can set this all up through a living trust.
A revocable trust can help protect your children by distributing amounts of money to them in small doses at different ages, rather than giving them everything when they turn 18. You can also personalize the trust, for example by designating portions of your wealth for college and living expenses for kids ages 18 to 22. Options abound for how to distribute the money over time and for designating whether the child or someone else has control over the money.