You will often hear estate planning attorneys saying that people of all ages need to have an estate plan in place. Young people may feel as though estate planning is not relevant to them because they are unlikely to pass away due to natural causes. And even if they did they have very limited assets to pass along so they feel as though the matter would just take care of itself. This is arguable, but it can be conceded that a young adult who is in college may not need to have a consultation with an estate planning lawyer occupying a prominent place on his or her to-do list.
However, once you get out of college, get married, and start a family an estate plan is a must. When someone is relying on your income you must have an income replacement vehicle in place, and this would typically be a life insurance policy. Young couples who have children have an added layer or responsibility in this regard. Accidents happen every day, and if both parents were to pass away in a traffic accident or some other type of tragedy the needs of the dependent children must be met. Minors cannot assume ownership of the insurance policy proceeds, so you need to account for this possible scenario in your estate plan. This is often done through the creation of a testamentary trust.
The word “testamentary” is derived from the word “testament” as in “last will and testament.” Actually both of these terms are interchangeable at this point, so the testamentary trust is part of a testament or will. The trust is created upon the death of the settlor, and it can contain assets that were already a part of the settlor’s estate as well as funds that were acquired as a result of the settlor’s death, like insurance policy benefits. When you are drawing up the will you name a trustee to administer the funds in behalf of the minor children beneficiaries. The trust will remain active until the children reach adulthood under terms specified in the will of the deceased parents.