If you are the parent of minor children, they are undoubtedly your primary motivation for creating a successful estate plan. As such, your estate plan should be tailored to provide for your children. An estate planning attorney at Nash Bean Ford & Brown, LLP explains how estate planning for parents with minor children begins by deciding how to protect the inheritance intended for those children.
Last Will and Testament Basics
A Last Will and Testament is a legal document that communicates a person’s final wishes pertaining to possessions and dependents. In your Will you can make both specific and general gifts to loved ones, charities, or even your family pet. Your Will is also where you will appoint someone to be the Executor of your estate. Your Executor plays a vital role in the probate of your estate after your death. Finally, a Will provides you with the only official opportunity you will have to nominate a Guardian for your minor children in the event one is ever needed after you are gone.
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Settlor’s Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place. Living trusts are further divided into revocable and irrevocable living trusts.
Parents with Minor Children
If you wish to leave an inheritance behind for your young children to ensure that they are financially secure if something happens to you, either a Will or a trust can be used to accomplish this goal. There are several important reasons, however, why you should consider using a trust.
Your minor children cannot legally inherit directly from your estate. Therefore, assets bequeathed to a minor child in your Will must be managed by an adult until the child reaches the age of majority. If you use a Will to gift assets, however, a court may end up deciding who that adult is that manages the assets. Moreover, you have very little say regarding how those assets are used when they are gifted in a Will. Finally, assets gifted in a Will must go through probate, meaning it could be a long time before they are available for the support and maintenance of your child.
If you choose instead to pass down assets using a trust, you have the ability to appoint the Trustee of the trust, meaning you decide who will manage your child’s inheritance. Furthermore, you can use the trust terms to retain a certain amount of control over how the assets are distributed and used. For example, you could dictate that a specific amount be distributed monthly or yearly for routine expenses and then include a procedure for additional distributions as needed for emergencies or special expenses. Lastly, assets held in a trust bypass probate, meaning they can be distributed as soon after your death as you allow in the trust terms.
Contact an Estate Planning Attorney
For additional information, please download our FREE estate planning worksheet. If you have additional questions or concerns about estate planning for parents with minor children, contact an experienced estate planning attorney at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.