By: Elizabeth A. Green, Esquire email@example.com
Well thought out and prepared estate planning is important for many reasons. Some reasons are obvious, such as tax planning and making sure your assets go where you want them to go; others are not. These less obvious reasons often impact negatively on one’s family. Everyone should understand the impact that a lack of good planning would have on his or her family.
For an individual with young children, a Will has many purposes. Some of the most important are designating a guardian for children and establishing the distribution terms of a child’s inheritance. A Will can contain the provisions to establish guardianship upon the death of the parents. A guardian is the person who will take care of a child’s needs such as shelter, food, health and education. In the absence of such a provision, the guardianship must be established in a court. Not only is this expensive, often requiring the person seeking guardianship to hire an attorney, it is time consuming and it may result in the appointment of a guardian whom the parents would not have chosen. With a simple provision, the Will can establish the guardianship relationship between a child and a selected individual or individuals.
Another simple provision in the Will can push the age of distribution of inheritance to 21 rather than 18, which is the default provision under most state laws, even without trusts. In addition, a simple Will can include language to allow even smaller amounts of money to pass to a child into a custodial account, as opposed to a court supervised guardianship, simplifying the manner in which the child’s custodians can access the funds.
If the estate is larger, the Will should include one or more trusts which provide a structure for the distribution of the funds to children. Some people consider trusts to be a parent’s attempt to control the actions of their child even after the parents are gone. There is another perspective. Trusts provide protections that outright bequests of funds do not. A trust may assist a younger heir with decision making, allowing the heir access to the funds in intervals so that there are funds available as the heir gets older and makes different (and perhaps better) choices. Trusts can protect assets from creditors, including creditors arising from a car accident or other type of liability. An inheritance is not considered marital property unless it is deposited into a jointly titled account. Keeping the funds in trust allows the heir to maintain control over the funds as opposed to losing them in a divorce. If there are individuals in your family, or others for whom you would like to provide, who are receiving or may need to receive supplemental benefits or insurance from the government, it is important to structure their inheritance properly. A lack of planning, or improper planning, can result in the disqualification of that individual. For those receiving Medicaid, the loss of benefits can be catastrophic, far outpacing the dollars received. Under most state laws, it is possible for assets to pass to a parent or other elderly family member who might already be in a nursing home or other facility without loss of benefits. The disruption caused by the receipt of even a relatively small inheritance without the proper planning could be quite disconcerting to the recipient.
People engage in estate planning for many different reasons. For most people, protecting their family, rather than harming them with no planning or improper planning, is one of the most important reasons (if not the most important) reason of all.
Elizabeth A. Green is a Member in PK Law’s Wealth Preservation Department. Ms. Green advises individuals with both basic and sophisticated estate planning needs including charitable planning and giving. Ms. Green can be contacted by phone at (410) 769-6150 or email at firstname.lastname@example.org.
This information is provided for general information only. None of the information provided herein should be construed as providing legal advice or a separate attorney client relationship. Applicability of the legal principles discussed may differ substantially in individual situations. You should not act upon the information presented herein without consulting an attorney of your choice about your particular situation. While PK Law has taken reasonable efforts to insure the accuracy of this material, the accuracy cannot be guaranteed and PK Law makes no warranties or representations as to its accuracy.