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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.
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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.
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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.
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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.
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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.
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If you remarry, you will likely want to provide for both your current spouse and your existing children. A Qualified Terminable Interest Property Trust (QTIP) can help. Assets transferred into the QTIP trust are not actually gifted to your current spouse when you die. Instead, your spouse receives income from the trust assets but cannot withdraw the principal from the trust nor can he or she decide on the ultimate disposition of the trust assets. When your surviving spouse dies all assets held in the trust are then transferred to the QTIP trust beneficiaries, typically your children from a previous marriage.
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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.
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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.
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Contact Us
The North Carolina estate planning attorneys at Clarity Legal Group are dedicated to helping you with all your estate planning needs, both now and in the future. Contact the team today by calling 919-484-0012 or contact us online.
