Often I hear people tell me, I do not need any estate planning documents because I am too young, I do not have any assets to worry about! Estate planning is not always about how much money you have and estate tax planning. If you do not have an estate plan in place, each state has its own set of laws that will have a plan for you. By having an estate plan, either a will or a trust, you are able to direct your assets to the beneficiaries that you designate. Even more importantly, if you have young children, you need a will to designate who will be the guardian for your minor children. You want to ensure that, as a parent, you select a person to raise your children who shares your values. You do not want your children to become involved in a custody dispute and you do not want a judge deciding who raises your kids if you pass away before they become adults.
You also need a will or trust to designate how the assets that you leave to your children will be managed. One of the biggest mistakes that I see is naming a minor child as the direct beneficiary on an account. What will typically happen is that if that minor child is the beneficiary, the financial institution will not release the funds without a court order. What is required next is that someone file a petition with the court to be appointed the court appointed guardian for that minor child. The funds will then need to be placed in a restricted guardianship account subject to court oversight, accounting, and court approved use. By designating the beneficiary of those same financial accounts to a living trust for example, the trust terms can dictate how the assets are managed, by whom, and distributed under what circumstances, thereby avoiding all of the unnecessary court fees, hassle and oversight. It’s important for parents to have a plan in place to ensure the financial support of their children if something happens to parents. This means not only making sure money is available – which may involve purchasing life insurance coverage – but it could also involve taking smart steps to structure an inheritance appropriately.
Regardless if you feel you have enough assets, or you are old enough to consider estate planning, consult with an attorney to see where your estate may be at risk, and what your options are.
Sinclair Prosser Gasior is an experienced estate planning firm that provides invaluable help to young families. When you need the assistance that qualified, compassionate estate planning attorneys provide, join us for a free seminar to find out all we can do for you. You can also give us a call at 410-573-4818 or contact us online to request a consultation with a qualified estate planning attorney.