Stereotypes surrounding “only child syndrome” have largely been debunked, as recent studies show that only children, on average, develop social skills similar to those of children with siblings.[1] Further, outdated perceptions surrounding only children have shifted as the average size of the American family has shrunk, and one-child families have become far more common.
Raising an only child can still sometimes present unique challenges for both the child and the parents, especially in the area of estate planning. In some ways, having one child simplifies the process. However, leaving an entire estate to them and making them the sole decision-maker for all the roles in an estate plan may not be ideal.
While the child’s age, personality, and lifestyle are major factors when estate planning with an only child, there are other considerations for your client to keep in mind.
The Shrinking American Family
Large families used to be the norm in the United States. At the peak of the baby boom (1946–1964), the average American family had 3.7 children, compared to 1.9 currently.[2]
Around one in five households today are one-child families,[3] and census data show that one-child families are the fastest-growing family unit in the United States. From 1976 to 2015, the number of parents with one child doubled from 11 percent to 22 percent.[4]
Providing for an Only Child in an Estate Plan
Generally, parents of only children are often in a better position to provide for them economically for multiple reasons. Higher educational attainment among parents is often associated with fewer children, and there is a strong correlation between education and income. Forgoing multiple children can also mean that parents have more resources available for raising their only child, which from birth to age 18 was estimated to cost more than $310,000 in 2022.[5]
Increasingly, the costs of raising a child do not end at age 18. Today, approximately 45 percent of young adults (18 to 29 years old) live at home with their parents,[6] and many remain financially dependent on their parents for support.[7]
Findings from a recent Pew Research survey show that most parents and young adults rate their relationship with one another as very good or excellent.[8] However, concerning estate planning, there appears to be a disconnect between the parents’ expectations and the child’s.
A 2024 study from Northwestern Mutual found that 32 percent of millennials and 38 percent of Gen Z expect to receive an inheritance—but only about 22 percent of Gen X and boomer parents plan to leave one.[9] Although 35 percent of boomers said giving a financial gift to the next generation was very important, only 11 percent indicated it was their top financial goal.[10]
Northwestern Mutual says that the study finds “a considerable gap exists between what Gen Z and millennials expect in the way of an inheritance and what their parents are actually planning to do.”[11]
Among children expecting to receive an inheritance, half consider it “highly critical” or “critical” to their long-term financial security.[12] That number is highest for millennials (59 percent), including 26 percent of millennials who said they will not be able to achieve long-term financial security without an inheritance.[13]
With all this in mind, leaving everything to an only child in an estate plan is the most straightforward option for parents. However, there is no legal obligation to leave a child anything in an estate plan.
Even if your client’s child no longer relies on them financially, parents can have good reasons for limiting a child’s inheritance or disinheriting them altogether. Whether they are estranged from their adult child, they do not need the money, or they are not responsible enough to handle an inheritance, their estate plan is their prerogative—and theirs alone. Should they decide that somebody else—such as other family members, close friends, or a charity—is more needy or deserving, it is their right to leave their money and property to them instead of their child.
Of course, gifting to loved ones upon ones passing is not an all-or-nothing proposition. Gifts can be split among a child and other beneficiaries. If your client has concerns about their child receiving a lump-sum inheritance, they can place money for them in a trust and name a trustee to manage the money for them, with distributions made at the trustee’s discretion or tied to incentives and milestones (e.g., holding a job, getting married, or starting a business).
The Only Child’s Role in an Estate Plan
Creating an estate plan involves naming key decision-makers who will act for your client during their life (in other words, during a period of temporary or permanent incapacity) as well as after they are gone. They may be considering appointing their only child to some or all of these roles:
- Personal representative/executor. This is the person named in a will (or appointed by the court if there is no will) to wind up the affairs after one’s death. Their responsibilities include inventorying, locating, and distributing the money and property, paying outstanding debts, filing a final tax return, submitting court documents, and communicating with beneficiaries or heirs.
- Successor trustee. This is the person named in the revocable living trust to manage the trust’s accounts and property for the benefit of the beneficiaries that were named. A common estate planning strategy is to name oneself as the initial trustee of a trust that holds their money and property and provides instructions about distributing them during their life and when they pass away.
- Agent under a power of attorney. Powers of attorney are legal documents that allow other people (the agents) to be named to handle the financial and medical affairs on the behalf of someone when they are unable to do so. The individual nominated as the agent or attorney-in-fact can be given broad, unilateral legal authority to make important health and money decisions when necessary.
Each of these roles comes with significant responsibility. Making an only child responsible for all of them might be too much for them to handle. Your client should ask themselves the following questions:
- Does your child have the right skills and aptitudes for this role?
- Do you trust them with your finances or to make your medical decisions the way you would like them to be made?
- Can they make tough decisions, handle pressure, and uphold legal duties?
- Do they have the right disposition to handle any disputes that might arise with creditors or beneficiaries?
- Do they have a busy professional or personal life that might interfere with their obligations to you and your estate?
Just as your client is under no obligation to leave everything (or anything) to their only child, they are not required to name them as a key decision-maker in their estate plan. As an alternative, they could choose a close friend, a family member, or a professional (e.g., a professional or corporate trustee) to fill these roles.
Their choice of executor, successor trustee, and attorney-in-fact should be based on the person’s ability to carry out the necessary duties competently—not on feelings of loyalty or obligation.
Dividing the powers among different individuals can also provide checks and balances that prevent a single individual from exercising too much control over your client and what they own. Naming their only child to multiple roles may raise conflict-of-interest questions as well, especially if they are not the sole or primary beneficiary.
Balancing Head and Heart in an Estate Plan
Parents are no strangers to weighing practical concerns for their children alongside the unconditional love they feel for them. Striking the right balance does not necessarily get easier as one age and their child becomes an adult. It might even become more complicated as they sit down to design an estate plan and make the important decisions in creating a comprehensive plan.
For advice about creating an estate plan that is best for everyone—your client, their child, friends, family, and others they care about—while accomplishing their specific goals, suggest they call Kerlin Walsh Law at 708.448.5169 to schedule a meeting. We can help with all the necessary decisions and what would work best for your client.
[1] Zara Abrams, Only children are often misunderstood. Take a closer look at the science. 55 Monitor on Psychology 6 (Sept. 1, 2024), https://www.apa.org/monitor/2024/09/only-children.
[2] The Only-Child Family, Psychology Today, https://www.psychologytoday.com/us/basics/family-dynamics/only-child-family (last visited Oct. 25, 2024).
[3] Id.
[4] Gretchen Livingston, Family Size Among Mothers, Pew Rsch. Ctr. (May 7, 2015), https://www.pewresearch.org/social-trends/2015/05/07/family-size-among-mothers/.
[5] Kendra Holten, The True Cost of Raising a Child, IFS (July 17, 2023), https://ifstudies.org/blog/the-true-cost-of-raising-a-child.
[6] Elizabeth Napolitano, More young adults are living at home across the U.S. Here’s why., CBS MoneyWatch (Sept. 21, 2023), https://www.cbsnews.com/news/gen-z-millennials-living-at-home-harris-poll/.
[7] Dylan Croll, A lot of young adults aren’t financially independent. Here’s what parents can do (July 9, 2023), https://finance.yahoo.com/news/a-lot-of-young-adults-arent-financially-independent-heres-what-parents-can-do-173631356.html.
[8] Rachel Minkin, et. al., Parents; relationship with their young adult children, Pew Rsch. Ctr. (Jan. 5, 2024), https://www.pewresearch.org/social-trends/2024/01/25/parents-relationship-with-their-young-adult-children/.
[9] Northwestern Mutual, As $90 Trillion “Great Wealth Transfer” Approaches, Just 1 in 4 Americans Expect to Leave an Inheritance (Aug. 6, 2024), https://news.northwesternmutual.com/2024-08-06-As-90-Trillion-Great-Wealth-Transfer-Approaches,-Just-1-in-4-Americans-Expect-to-Leave-an-Inheritance.
[10] Id.
[11] Id.
[12] Id.
[13] Id.
