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Giving the kids money now could massively change your estate plan

Estate planning involves, among other things, determining how to leave your money to your children. When you pass away, your wealth goes to them. You simply need to figure out the best way to do it.

But what if the children need that money now? Giving it to them in advance could have a massive financial impact on your future, changing your retirement plans and your estate plan.

You may scoff at the idea if you have young children, looking forward to the day that they turn 18, and they can take care of themselves. However, one study determined that an astounding 74 percent of parents in that position actually still give the children financial assistance. Within that group, 70 percent of the parents helped their kids pay off debt and 84 percent just helped them cover living expenses.

As you can see, it may be a bit harder to cut them off than you anticipated. This could drain your funds and leave you with nothing for the kids at the end of your life. You may not even be able to retire.

"The worst case scenario is because the parents have helped their kids, and sacrificed their retirement, in 20, 25 years, the script might get flipped and the kids might have to help out their parents because they can't afford to retire," said a senior industry analyst for the company that did the study. "There is a real risk there."

Remember, estate planning also involves looking at end-of-life care, funeral expenses, taxes and many other financial obligations. Make sure you know what legal steps you need to take and how your financial decisions today may change the ones you make later.

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