Q: I’m 71 and my estate will be divided between my daughter and son; there are no grandchildren. My son and I differ radically on some political views. Is there any way to stipulate that none of my money will go to his causes? — Janet S.
A: The only way you can influence how heirs spend your assets from beyond the grave is with a trust, says CPA and financial planner Dina Lee, managing director of the Colony Group’s New York offices. This document goes beyond a will in that it not only outlines who will receive your property (and how much of it), but also helps guarantee your legacy and your intentions.
You can control the trust while you’re alive by drafting a living will with an estate planning attorney, but you will need to carefully appoint someone — be it a friend, family member, or third party like a bank — to manage the assets and distribute funds to beneficiaries after your death, following your instructions.
Beyond determining who inherits how much, a trust lets you include additional instructions to create hoops for heirs to jump through. An incentive trust, for instance, might force an heir to meet certain requirements — earning a degree, say, or passing a drug test — to receive funds. Staggered trust distributions allow your estate to pay out money incrementally over a certain timespan; such instructions are often aimed at allowing more money to be disbursed as heirs mature.
In theory, you can make the trust as restrictive as you like as long as those restrictions don’t break any laws — forbidding an heir from entering an interracial marriage, for instance.
But this is where your specific restriction may run into trouble. While you can specify that you don’t want heirs to give any of their trust funds to a specific political party, or certain political causes, your son could challenge that restriction in court — and the court could overturn it by finding it to be a violation of freedom of expression.
A wiser tactic, suggests Washington, D.C. estate planning attorney Bill Sanderson, would be to “only permit that which you want to permit.” Rather than trying to exclude certain activity, simply spell out which expenses you feel comfortable supporting, he suggests; the list could include such items as mortgage payments and rent, healthcare bills, insurance, and education costs.
This strategy is easier on the trustee, adds Sanderson, because he or she can simply ask beneficiaries to show proof of an expense and then issue a reimbursement — without having to play detective.
Understand, however, that such restrictive arrangements can cause resentment from heirs.
And there’s another issue. Lee points out that even if you craft the trust in a way that limits its use for political donations, simply giving your son money will increase his wealth, and thus free up more funds that he can give to those causes you disagree with.
Says Lee: “Indirectly, you are still enabling him to support his political beliefs — and accepting that the trust can’t change his behavior is part of letting go.”