Protecting Children with an Estate Plan
According to a 2019 survey, 57% of adults in the United States have not prepared any estate planning documents, such as a will or trust, despite the fact that 76% viewed them as important. Many believed mistakenly that it was not necessary because they did not have many assets. Estate Planning is not just for the rich. In fact, when you have substantial debt (business or personal), your heirs have more to lose when you die if you have not protected your assets from collection.
Estate planning is especially important to: (1) Protect your family from your debt; (2) Name guardians for your kids; (3) Help protect your kids’ money; and (4) Make advance health care decisions for yourself.
- Estate Planning is Important to Protect your Kids’ Inheritance from Creditors.
Most Americans will die with some sort of debt. Many people do not realize that those with debt really need an estate plan to make sure that their estate (and their children’s inheritance) is not used to pay for those debts. Did you know that medical providers, credit cards and private student loans may be able to collect from your probate estate? An estate planning attorney will help you identify what will become part of your probate estate and work with you to find ways to avoid having your assets become subject to the claims of creditors.
- Estate Planning is Important to Name Guardians for your Kids’ Property and Person.
If you do not name a pre-need guardian (in case you and your spouse or co-parent become ill or incapacitated) or through your will, then a Judge will name a guardian for you. Parents also have the option of naming a person to be the child’s physical guardian, and another person as the custodian of the child’s property.
- If your kids are Over 18, an Estate Plan Will Help You Protect your Kids from Themselves.
A trust can be used to protect your kids from squandering their inheritance with their own bad decisions, creditors, a spouse (or ex), etc. Through a trust you can specify when your kids will receive distributions, the amount, or what the money can be used for, such as college or buying a first home. Would you really want a 20 year old getting their hands on a substantial life insurance policy? Would you want your child’s spouse getting half of his inheritance at their divorce? If properly funded, a trust can safeguard your life insurance and other assets for those items that are most important, so that even if you are not here on earth, you are still helping your kids or grandkids to make smart choices.
- Estate Planning Considers both Life and Death Issues – including your own end of life.
You can specify in your living will or advance health directive whether you want to be kept on artificial life support, if you want any limitations on pain medication, or if you want food and water administered if you are in a terminal condition. This will ease the burden on your kids – no matter what their age. You can also designate someone to make decisions or give informed consent on your behalf, if you are unable to because you are incapacitated or in a coma. In the event you become incapacitated or disabled, you can also declare who can serve as your agent in all matters to avoid expensive guardianship proceedings. Moreover, if you have a trust and it is funded correctly, you may even save your kids from the expense and hassle of a time-consuming probate of your estate.