When we think of estate planning, most of us focus on purely financial concerns. However, one of the most important reasons to prepare an estate plan is to ensure that your child will be provided for after your passing.
Determining Legal Guardianship
Naming a legal guardian is a critical component of any parent's estate plan. If you don't name a guardian for your child, the courts will be forced to step in and appoint someone.
A guardian should be someone who already has a strong bond with your child, has a similar parenting philosophy, and is willing to assume the responsibility. Guardians are most often relatives, but a close friend may be appropriate in some circumstances.
Providing for a Child’s Living Expenses
Children under the age of 18 can't legally own property, so assets will need to be placed in a trust to be used for your child's benefit. You'll need to choose a trustee and set up a testamentary trust to hold property for the benefit of your child. Trust assets can be used for his living expenses and education.
A testamentary trust is more flexible, less expensive, and easier to administer than a probate conservatorship. It also carries the important advantage of addressing the issue of your child receiving a large windfall on his 18th birthday. To encourage sound decision making, you can arrange to have assets transfer to your child's direct control as he meets certain milestones such as graduating from high school, finishing college, getting married, or purchasing his first home.
Creating a Special Needs Trust
If you're the parent of a disabled child, estate planning comes with unique challenges. You'll need to arrange for a transfer of assets that doesn't jeopardize your child's eligibility for Medicaid, Social Security disability, and other need-based government benefits. This can be done by creating a special needs trust with the assistance of your attorney.
Creating an Estate Plan that Provides Peace of Mind
With a comprehensive estate plan tailored to your family's unique needs, you can rest easier knowing that your child will be provided for no matter what the future holds. To learn more, call (919) 873-0166 to schedule an appointment with attorney George H. Pender.