Why is estate planning important for parents with young children?
You undoubtedly work hard to give your children a stable and financially secure life. You may also try to pass down your wisdom, ideals, and beliefs to your children. All these things can be accomplished while you are alive and capable of working and/or parenting. What happens, however, if you are not here one day or are no longer capable of caring for your children? Estate planning can help ensure that your children are protected and cared for even if you cannot do so yourself.
Why can’t I just leave assets to my children in my Will?
While a Last Will and Testament can be used to distribute an entire estate, gifting assets to your minor children in your Will is not the best choice because your minor children cannot inherit directly from your estate. Therefore, assets gifted to a minor in a Will must be managed by an adult until the child reaches the age of majority.
What can I accomplish in my Will?
Although you will need more than just a Last Will and Testament if you have minor children, your Will can be used to ensure that specific assets are passed down to the beneficiaries of your choosing. You can also appoint your Executor, who will be responsible for administering your estate, and nominate someone to be your children’s legal guardian if one is ever needed. In fact, your Will offers the only official opportunity you have to tell a judge who you want to care for your children in your absence.
How can a trust help manage assets intended for my children?
For the parent of young children, a trust offers several important benefits. As the Settlor of the trust, you appoint the Trustee, and any successor Trustees, allowing you to decide who will protect and manage the inheritance you leave your children.
How can I avoid leaving my young adult children a large sum of money?
A trust can also help with this common problem. No matter how mature a young adult child may be, handing over a large lump sum inheritance may not be a wise idea. A trust lets you stagger that lump sum, spreading it out in smaller disbursements. You can also decide when they receive those distributions and how much will be distributed each time.
How can you protect children from a prior marriage when you remarry?
Place the assets intended for your kids in a Qualified Terminable Interest Property (QTIP) Trust. While you’re alive, you control the trust terms. After you’re gone, your new spouse receives income from those assets for life but can’t tap the principal or redirect it. When your spouse passes away, everything left in the trust goes straight to the children you named as beneficiaries—no detours, no disputes, and no court delays.
How can I protect the inheritance of a problematic child?
If you have a child who has a history of mental illness, addiction, or simply spendthrift tendencies, you can add a spendthrift provision in a trust that protects the child’s inheritance from most third-party claims. You can also use that trust to dictate how the child can use the assets held in the trust.
What else should be in my estate plan when my children are adults?
Once your children are well into adulthood you may want to add funeral planning and advance directives into your estate plan. Doing so ensures that your wishes will be honored at the end of your life and after you are gone without forcing your children to make difficult decisions during such an emotional time period.