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The Moneyist: My wife and I are in our 60s. Should we skip our 3 undeserving children and leave everything to our 4 grandkids instead?

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Dear Quentin,

My wife and I are in our mid-sixties and we are both retired. My parents have passed on. I have no living siblings or children. My wife has 3 adult children in their 40s. None of them are mature, responsible adults. (Alcohol, drugs, can’t hold a decent full-time job etc.). They have 4 children.

We have to make some tough decisions regarding estate planning. Is it a viable option to skip the “middle generation” and bequeath all to the 4 grandkids? They are aged between 10 and 18.

We don’t want the “middle generation” to gain from our estate, while cheating our grandkids out of their rightful inheritance, and we don’t want our life savings burned up by 3 undeserving kids while the grandchildren suffer. Can a trust or will assure us that our desired plan will actually happen?

Concerned Grandparents

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

Dear Grandparents,

Can you skip the middle generation? You can. May you skip the middle generation? You may. I don’t want to sound like an elementary-school teacher, so let me reassure you that my opinion is not a judgment call on whether you should or shouldn’t, it is merely a vote of confidence for you to trust your gut and always remember that past behavior is the best predictor of future behavior.

A trust is a more private option than a will, and you can obviously set out terms of that trust, and give the beneficiaries an income instead of a lump sum, if you don’t feel comfortable that your grandchildren would give the money to their parents to support bad habits. You could also provide money from the trust for, say, to help toward a down payment for a home in the beneficiaries’ name.

‘Alternatively, you could add terms to the trust to encourage good behavior in your wife’s children.’

Alternatively, you could add terms to the trust to encourage good behavior in your wife’s 3 children. “Incentive distribution schemes are common ways clients encourage productivity. If a beneficiary is in school, cash distributions from the trust can be made only if the beneficiary maintains a certain grade point average,” according to The Sketchley Law Firm.

Similarly, any distribution to your kids or grandkids could require proof that they have been alcohol- or drug-free for X years. ”Distributions may be conditioned on continued participation in drug and alcohol counseling, completion of in-patient rehabilitation programs, or remaining free of any further criminal or traffic violations related to drugs or alcohol,” The Sketchley Law Firm adds.

Your letter comes at an opportune time. I moderated a “MarketWatch: Mastering Your Money” online town hall, and I hosted a session on setting up wills and trusts with Elizabeth Forspan, an estate-planning attorney and partner at Forspan Klear and Amy Zehnder, managing director at Leadership and Legacy Consultant, Ascent Private Capital Management of U.S. Bank.

Zehnder summed up the difference between a will and a trust thus: “You don’t want all of your stuff to be visible to everyone, dumped in the front yard. And that’s probate! Trusts help to maintain privacy.” Should you decide to have a conversation with your kids about a trust, and you are under no obligation to do so, Zehnder suggests using words like “hopes, dreams, achieve and preserve.”

Forspan recommends that wills and trusts should be revisited and, if need be, updated every 4 to 5 years. “Anytime, there is any major change in the tax law, or if there is any change in your family situation, or you get divorced, married or, God forbid, if someone in your family dies, you should always have a plan. And appoint a power of attorney should you become incapacitated.”

There is much you can do to help your children and your grandchildren, whether they see it that way or not.

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