With just one heir, a simpler set of rules applies.
In some circles, two is company and three is a crowd, but in estate planning, it only takes two to have a crowd ... and potential complication.
Linda Leitz, an owner of Pinnacle Financial Concepts, Inc. in Colorado Springs, Colo., is both an only child herself and has only children as clients, so she's given considerable thought to this topic. I interviewed Leitz to uncover the truths of planning for only children that other advisors often miss.
Drucker: What initially focused your attention on the differences between planning for a client's many children versus their only offspring?
Leitz: It was my own situation with my mother and my need to set up a plan of care when she slipped into dementia several years ago. Reflecting on that, I'm really glad I never had to negotiate her care with any siblings. We are both lifelong Christian Scientists and, even as my mother was entering the early stages of dementia, she was adamant about relying on Christian Science -- not medicine. If I'd had siblings who didn't practice Christian Science, I might have had to battle them while I was dealing with the trauma of getting her the care she needed. I've seen this with some of my Christian Science clients who have parents with physical or mental treatment needs. The argument about where an adult parent needs to be and what kind of treatment they're given can get very ugly and take the focus off the family member who needs everyone's loving support.
Drucker: I guess I never thought of it that way. So what would you say is the downside, if any, of being that only child?
Leitz: The downside is that the only child is the only one to do the work. I've taken off work when Mom had problems with her health and she needed someone to stay with her. There was no backup for mother, unless I hired someone. And sometimes that just felt too impersonal.
Drucker: So the benefit is greater control and the price is no siblings to share the caretaking. And the care increases once one parent has died, right?
Leitz: Exactly. After my dad died, my mom began asking me to handle more and more of the financial issues for her. Dad had made sure that she'd taken over paying the bills and dealing with the investment broker before he passed on. He wasn't sick; he just assumed the actuaries might be right and she'd be on her own at some time in the future. If he guessed wrong and she pre-deceased him, he figured it would be easy for him to take back over the finances. So, with no siblings I didn't have to deal with the issue of who might be offended by the decisions I made for mother. Or, if she chose to gift money to me, there were no brothers or sisters she might feel the need to make equivalent gifts to.