Estate Planning Can Help Your Children
Issues that arise:
Estate planning can benefit your children. For example, the following issues can be avoided or mitigated:
A minor child inheriting property, causing a costly and burdensome guardianship;
A child inheriting significant property at the age of (18);
Having the law, not your preference, to determine who cares for your child if you pass;
A disabled child losing government benefits.
Won’t my spouse inherit all my property and not my children?
Probably not. If you read my post about where property goes without a will, you will see children will inherit property. (Of course, if you have a will, then you can leave all your property to your spouse, assuming they survive you). But, when minor children inherit property, a guardianship can be anticipated.
Problems with guardianships:
Guardianship proceedings are formalistic, requiring court approval for certain expenditures – slowing expenditures for your child’s needs.
Guardianships have strict reporting and accounting requirements.
You likely will have to incur the cost of hiring a lawyer to handle the legal proceedings. This is money that could have been used by your loved ones.
A guardianship generally ends at age 18, meaning an often immature 18-year-old child gets access to all economic resources with the freedom to spend it as he or she wishes.
Solutions
When you have an estate planning attorney draft a Texas Will, the attorney will likely include a contingent trust. You can read about what a trust is here. Essentially, this prevents guardianships and will also allow you to control the age at which your children receive funds. It can also limit expenditures to health, education, maintenance, and support.
Appointing someone to care for your child
If you are single or if you are married and you and your spouse pass simultaneously, the law has default guardians designated for your child(ren). Generally speaking, the order of preferred guardians follows familial ties. However, this may not reflect your wishes. For example, you may have trusted friends who have a better life situation or share similar values that you would rather care for your child. When you declare a guardian for your child as a part of estate planning, you get to decide who cares for your child financially and on a day-to-day basis.
If you have a disabled child, a special needs trust can help preserve your child’s government benefits
To receive disability benefits from the government, one must essentially remain in a state of poverty. If you have a child that is receiving social security benefits when you pass and inherits money, this could jeopardize your child’s benefits. If it causes your child to lose his or her benefits, your child must spend through their inheritance to qualify again for government assistance. However, with estate planning, you can create a Special Needs Trust (sometimes referred to as a Supplemental Income Trust) to leave money to your disabled child to better their life without jeopardizing their government benefits. Read more about special needs trusts here.
Plan for the future, it is an act of love
Facing one’s mortality is not fun, but taking steps today can be an act of love to ensure that your children and loved one’s would bear a smaller burden in the event of an untimely passing. Contact me to discuss your estate planning options.