Protecting Your Heirs from Debt


We spend our life in modern society accumulating Things and possibly accumulating money. When you take a step back and look at life on the larger scale, money is not a goal in isolation. We strive to accumulate wealth not to die with our names in various banks' computers associated with high numbers. There must be something else we intend to do with that money, as it is only a tool, a means to an end.

Among the ability to buy and accumulate Things, having money allows us to have more options. Having money allows us to have children - although the lack of money rarely stops people from procreating. Parents who have unspent money may decide to transfer their wealth to their children as they approach or reach the end of their lives.

The decision to leave money to children is personal, and there are many arguments both for and against. But assuming you've made the decision to pass wealth to younger relatives, how do you decide how much each heir should receive? One option would be to divide your estate equally among all recipients or equally among recipients of the same level. For example, with $30 million to distribute and two children and four grandchildren, you could leave $5 million for each heir. Another option would be to leave $8 to each of your two children and $3.5 million to each of the grandchildren. Either one of these options might be considered "equal."

What if one of your children is a successful entrepreneur who is wealthy in her own right and the other is a successful non-profit manager who has not earned a fortune on their own but has struggled for an important cause? Would it still be right to leave equal amounts to each child? What would you do if one of your grandchildren is developmentally disabled and would benefit from several million dollars to cover a lifetime of health care expenses?

"Equal" is not always the same as "fair," and it's usually easier to determine what is equal than to determine what is fair. How would you decide to allocate your wealth among your heirs? This dilemma could be avoided by giving your fortune to charity. However, assuming you've decided the money could be well cared for in the hands of offspring or other heirs, what would you do?

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