A premature passing of a parent is a traumatic event that can affect a child for their entire life. While nothing will ever replace the parent, by creating a unique estate plan, you can ease this transition if you pass prematurely.
If you have minor children, one of the most important documents you can execute is a statement of who you would want to be your child’s guardian after you pass. If you do not name anyone to serve as the legal guardian for your children, it will be completely in the Court’s discretion as to whom they appoint to serve in this role. Your voice will not be heard at this critical time. By drafting this statement in your estate planning documents you can ensure that your input is heard at this critical juncture.
Another great question that parents need to keep in mind is “If you leave your children funds when will they receive them?” The answer is that it will depend. If you have no estate planning documents in place, the State will determine when your children have access to these funds. According to the State, your children will receive full access to their funds upon reaching the age of 18. It goes without saying that allowing an eighteen-year-old to have access to large sums of money can create many problems.
However, there is a solution. You can create a trust which will hold the funds for the benefit of your children. Trusts are highly flexible vehicles that will allow you to ensure that your legacy is given to your children in stages and at a time they are more financially responsible.
For example, the trust can include a clause that your child will not receive access to the funds until they graduate college or reach the age of 25. This language will allow your child to become more financially savvy before having access to any funds.
This is just one example however, there are an infinite number of different ways that you can structure any gifts to your children. Another, example would be to give each child a certain percentage of the trust assets each year. This can be great way to ensure that your child has a stream of revenue each year. Each situation is unique, we would love to work with you to craft a plan that meets your specific needs.
Many parents worry that if they put such a rigid structure in place, it will cause potential problems. For example, if a unique need arise (such as an unexpended medical bill) their children will not have the funds available to them. This does not need to be the case. The Trust can include language that the trustee can distribute funds from the trust for the care, maintenance, and education of your child. These distributions will be in the Trustees discretion, but it does allow for your child to be cared for if an unexpected need arises.
On the topic of needs, one situation that no parent wants to think about but should plan for, is what will happen to your legacy if your child becomes disabled. If your child is receiving government benefits, any funds that flow to them directly can affect their eligibility to receive government assistance. Language can be included in your estate planning documents to account for this unexpected situation. Rather than receive the funds directly, your documents will direct that any funds that would flow to a disabled child be distributed to a special needs trust. In this situation the funds never become titled in your disabled child’s name, and the child can continue to receive government assistance. Additionally, these funds will be used to pay for any additional care that your disabled child needs. This will preserve your legacy for a longer period of time by allowing your disabled child to continue to receive government benefits and be supplemented by your legacy.
Planning for the future is something that more parents need to consider. It is a great opportunity to provide for your children’s health and welfare. Additionally, planning can ensure that your legacy is available to your children in an appropriate time and manner. We would love to talk to you about this or any other estate planning needs that you might have. Schedule your FREE consultation with us today.
Estate Planning & Elder Law Attorney