Young individuals with kids are generally in the initial stages of their lives and careers. Thus, they might not have something larger to be affected by taxes if they happen to die by chance. However, there are several non-tax reasons why estate planning for minors is essential. Estate plans are powers of attorney, or wills, or advance medical directives designating how the makers or the testators will allocate their assets after they are no more. Most of the time, married people leave their assets to each other with the hope that the surviving partner will make use of the inherited estate for providing for and caring for surviving children.
But if both the parents die one after the other leaving behind minors, a complication arises during estate distribution. The situation requires diligent planning if parents want to protect their kids financially and personally after their death. Some important steps parent need to take when estate planning for kids are as follows:
Estate Planning for Minors: Come Up with a Will
Coming up with a will for young parents is not about leaving behind assets but mainly about naming someone as guardian for the minors after their death. The guardian whose name is written will be taking over if both father and mother cannot raise the kids. If your kids ever need a guardian, the local court will appoint the individual you have named in the will. You also have the option of naming different individuals as guardians for different kids.
Nevertheless, if the parents did not specify their wish, the court will choose a person as a guardian without taking advice from the parents. In this case, a very common choice is one of the family members. Another reason is if one of the parents dies, the money left behind directly goes to the kids instead of the spouse. In such circumstances, couples would want to give the properties to the spouse so that he or she can use it for taking care of the kids.
Estate Planning for Minors: Distributing Assets
In case you have named an individual as the beneficiary for your bank accounts, retirement savings, insurance policy, and various other assets, you must name your kids as the secondary beneficiaries if you or your spouse pass away simultaneously. Estate planning attorneys can help parents in setting up their trusts for managing the assets of their children until they are adults. Trusts generally establish funds from which the trustees or conservators can draw cash for covering the expenses of the kids. The kids generally gain control of this money once they are 18 years of age.
Taking Care of Kids with Special Requirements
A special-requirement trust can be of good help in providing for minors with disabilities throughout their lifetime. Special requirements trust help in avoiding circumstances when it comes to social security, governmental, and medical assistance of the child. It is necessary for you as a parent to get in touch with a professional estate planning attorney who can help you with the complications of special requirements trusts.
What about Kids from Previous Marriage?
Individuals with kids from their previous marriage would like them to inherit specific percentages of estates or particular assets. This even is true for situations when his or her current spouse partner is present. If you do not trust your former partner to use the inheritance in the right manner, be smart. Then you can direct the inheritance to a trust. You can do this even if your former partner is still alive. Nevertheless, such specific wishes need to be appropriately outlined in the will by a qualified estate planning lawyer.
Executing the Power of Attorney
This completes the estate planning procedure. Parents come up with an exclusive medical directive along with a power of attorney. It allows a person to appoint a certain agent to take care of different financial and also medical issues. This agent is generally the living spouse. The names of successor agents are present in a power of attorney. Advance medical directives set forth the last wishes of a person regarding situations after his or her death.
Estate planning for minors is not a complicated task if you know the steps that need to be taken. Taking the assistance of an experienced and qualified estate planning attorney can help you out in the long run.