Letting the Children “Figure It Out” Is Not an Estate Plan
Families often assume that because their adult children get along, have good judgment, and respect one another, they will simply “figure things out” after their parents pass away. Unfortunately, this belief can lead to unnecessary conflict, financial imbalance, and legal problems—especially when a family business or farm is involved. As a will and trust lawyer in Naperville, I routinely see the consequences of failing to put a formal plan in place.
Consider the common situation of a retired farmer with two children: one who works on the farm and one who lives out of state. Believing the situation to be straightforward, the parent decides not to create a will or trust. The assumption is that the children will cooperate and reach an agreement. But this approach ignores several critical risks.
Long-Term Care Can Upend Everything
Before any discussion of inheritance can even take place, long-term care can rapidly consume savings and significantly alter the plan. Without a properly executed financial power of attorney, the family may be unable to transfer the home or farm to the healthy spouse if needed. Although Medicaid imposes a five-year lookback on most transfers, this rule does not apply to transfers between spouses—an important planning opportunity that is often overlooked.
Estate planning at this stage should also include a healthcare power of attorney for each spouse. Typically, the adult child who lives nearby and understands the business is in the best position to make timely decisions during a crisis.
Protecting the Surviving Spouse
After the first spouse dies, the surviving spouse’s financial security must be protected. If the surviving spouse later requires long-term care, available cash assets may be depleted. The child who inherits the farm could then be left without the liquidity needed to keep the operation running. A comprehensive plan—often involving trusts—is essential to prevent this outcome.
The Myth of “Equal” Without a Plan
When one child has devoted years to working on the family farm and the other has pursued a career elsewhere, balancing inheritances becomes complex. If the farm appreciated substantially over several decades, should the child who stayed be required to buy out their sibling? And if so, at what value?
This is where advance planning is indispensable. Equal does not always mean identical, and without clear legal documents, siblings can be forced into difficult financial negotiations that strain lifelong relationships.
Additional Complications: Preservation, Appraisals, and Development Rights
Many farms today involve conservation easements, sale of development rights, or other preservation arrangements. Each of these affects the property’s value, and without a professional appraisal, determining the farm’s worth—and how to divide it—can be nearly impossible.
Estate planning for a family-owned farm or business requires specialized knowledge. Leaving it to the next generation to sort out is rarely successful.
The Bottom Line
Relying on children to “figure it out” is not an estate plan. Families with farms, businesses, or even modest assets benefit greatly from proactive planning. Creating a comprehensive will or trust helps preserve family harmony, protects surviving spouses, and prevents costly legal disputes.
If you are ready to build a plan that safeguards your family and your legacy, consulting with a will and trust lawyer in Naperville is the most effective first step.