Having a comprehensive estate plan in place is important for everyone once they reach adulthood. It is even more important, however, for the parents of minor children. Your minor child cannot inherit directly from your estate, yet you undoubtedly want to provide for your child and protect your child until he or she reaches adulthood. In order for that to happen, it is essential that you have a well drafted estate plan in place and that you take the time to contemplate the choices you make within that plan. Furthermore, you should work closely with an experienced New York estate planning attorney to ensure that your plan will accomplish your goals with regard to your children. Although every estate plan is unique, take a moment to consider the following common estate planning strategies for parents with minor children:
- Use your Last Will and Testament to nominate a guardian. Like most people, you likely think of a Will as a legal document used to determine how estate assets are distributed upon your death; however, your Will allows you to do something that is potentially far more important than deciding who gets what from your estate. Your Will is the only opportunity you have to nominate a guardian for your children should one ever be needed. With that in mind, take the time to consider who you would want to be your child’s Guardian and make sure you include that nomination in your Will.
- Know how much you need to leave behind. Take the time to sit down and calculate how much it will cost to raise all of your children to the age of 18 or beyond. Although you may not have the assets available right now to fulfill that type of commitment, you can use life insurance as a cushion until you build up your asset portfolio to the point where you feel comfortable with what you are leaving behind.
- Know the importance of incapacity planning. Death is not the only parenting risk for which you need a plan. If you were to become incapacitated tomorrow as a result of a tragic accident or life-threatening illness, what would happen to your children? Who would have access to assets needed to fund their care? An incapacity plan will plan for the possibility of your incapacity and ensure that you and your children are protected in the event the possibility becomes reality.
- Gain a clear understanding of how trusts work and make use of them in your plan. A trust agreement, of some sort, is an extremely common addition to any estate plan created by the parents of young children. Often, a testamentary trust is created to protect and manage estate assets until the children reach the age of majority should the parent die before the children are old enough to inherit directly from their estate. A Trustee, of your choosing, will protect and manage the assets you leave behind and ensure that those assets are used for your children’s care. Moreover, you create the terms of the trust, ensuring that the assets are used as you see fit.
- Evaluate your estate for liquidity. Leaving sufficient assets to a spouse, or even to a trust, to care for your children is often the goal of an estate plan; however, if the assets left behind lack liquidity they won’t be able to help anyone for months, even years, after your death because they are tied up in probate. Your spouse and/or children need immediate access to assets after your death in order to pay the bills and maintain the standard of living to which they are accustomed. With that in mind, take the time to consider what assets in your estate are probate assets and which assets will be able to bypass probate, making them immediately available to your children. The proceeds of a life insurance policy, for example, do not go through probate nor do assets held in a trust.
If you have questions or concerns regarding how best to incorporate estate planning strategies for parents with minor children into your estate plan, please join us for an upcoming free seminar or contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.