Typically, as parents of minor children you have two major concerns. Your first concern is who will raise your children if you are no longer able to do so. This involves naming a guardian in your Will in the event both of you die while the child is still a minor, so the Probate Court, which actually appoints the guardian, will know your preferences. The second situation in which you will want to have named a guardian for your children is in the event of your disability. One or both of you could be alive but incapable of caring for your children. For example, you could be in the hospital and incapacitated after an automobile accident. In that case, your children will need to have a permanent or temporary guardian appointed. The way to name a person to act as guardian for your children in this instance is in a Durable General Power of Attorney.
Another major concern is the age at which your children will receive their inheritances. If you create a Will and name your minor children as beneficiaries, your children will receive their inheritance at age 18. If the child is a minor when you die, the Probate Court will direct that the funds be held in an account until your child turns 18. On your childs 18th birthday, your child can appear at the Probate Court and obtain an order to distribute the funds to your child. If you want to delay the age at which your children can receive their inheritances outright, a trust is the method to stretch out those ages. For example, in a trust you can make funds available for your child’s support, health care, and education, but funds are not available to be used as your child wishes until your child reaches the age or ages you specify. Typically, funds are distributed to your child one-third at age 25, one-third at age 30, and one-third at age 35. You name a trustee to be in charge of the funds until your children reach the ages specified. The trustee of the trust and the guardian of your children can be the same person but need not be.
When choosing a trustee you may want to consider the following:
- Is the person a good money manager?
- Does the person have the time to properly manage the assets?
- Is the person capable of handling what might be a large sum of money?
- Who would serve as trustee if your first choice cannot?
When choosing a guardian you may want to consider the following:
- The age of the person.
- If you want to name your married sister, for example, to be the guardian you may want to name your sister alone, and not your sister and her husband. If your sister should die or divorce, you will want to make it clear that it is your sister and not her husband that you would like to act as guardian. If it is your intention that your sister’s husband should be the guardian if your sister is unable to be guardian, then you should clearly specify that is what you want.
- Who would serve as guardian if your first choice cannot?
Documents typically included in the estate plan:
Will - Directs who is to receive your property, names your Executor, avoids the cost of an executors bond, names guardians for your minor children, and helps reduce the expenses of probate administration.
Trust - Reduces or eliminates estate taxes, avoids probate, controls the timing and purpose of distributions to children, grandchildren, and others, provides for children with disabilities, names someone you trust to manage your assets in the event of your incapacity or death, allows for ease of estate administration, maximize your privacy, and avoids probate proceedings in multiple states if real estate is owned in different states.
Durable General Power of Attorney - Names someone you trust to manage your financial and legal affairs if you become incapacitated and names someone to be your guardian if you should ever need one.
Power of Attorney for Health Care, Living Will, and HIPAA Release - Specifies your wishes regarding life sustaining medical treatment in certain circumstances and authorizes family members or others to obtain medical information if needed.
Beneficiary designation forms - Identifies the beneficiaries of your retirement accounts and life insurance policies.
Complete Asset List - Guides whoever will take over your affairs because of death or disability.
click here to go to the Estate Plan Worksheet
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