If you’ve just added a new member to your family, you’re facing a host of new thrills and challenges. Many young families have never initiated the estate planning conversation until after welcoming a child. Regardless of whether you have an existing will or other estate planning documents, or are starting from scratch, it’s imperative to create a plan that will accommodate the care of your child(ren) and the preservation and protection of assets for the long term benefit of your child.
A Last Will and Testament is the document in which parents can designate the guardians (or actual physical caregivers) for their children should something tragically befall both parents. In Indiana, the probate court in the county in which the child resides will have jurisdiction to appoint the legal guardian, but the Court will consider the deceased parent’s wishes set forth in a Last Will and Testament in making the appointment.
Planning for how the inherited assets should be held, managed, invested and distributed for the benefit of each child should be set forth either in Testamentary Trust language (meaning language built into the Last Will and Testament establishing a child’s trust and dictating the terms of its administration) or in a Revocable Living Trust (meaning a trust created while the parents are living, into which the inherited assets are transferred and then administered for the benefit of said children) so that the assets are (1) protected, (2) easily accessible for the use and benefit of the children without necessity of court supervision, and (3) ultimately distributed to each child at an age of maturity set ahead of time by the parents, not at the age of 18 which, by law, would otherwise be the case.
Proper and thoughtful estate planning can eliminate the common pitfalls of (1) creating restricted minors accounts through naming minor children as direct or contingent beneficiaries on accounts, (2) distributing large lump sums upon the child’s 18th birthday at a time when the child may lack the financial maturity to effectively manage them, and (3) creating family discord over appointment of guardians or management of a child’s assets in the absence of detailed instructions.
At Halcomb Singler, we love to help young families create their first plan, or amend their existing plan, to ensure the best possible care of surviving children, and the best possible management of assets descending to those children through inheritance.