New parents are excited, nervous and ultimately, overwhelmed. Oftentimes, it seems easier for them to fret about the smaller things in raising a child, rather than addressing the truly important aspects of providing for a family. Fortunately, there are simple steps that you can make to ensure that your family will be prepared to manage and overcome many of life’s obstacles. Designing an “estate plan” is the first step that allows sleep deprived parents to rest more easily.
What is an Estate Plan?
Generally, an estate plan involves the creation of legal documents such as a Last Will and Testament or Trust, which allows for, among other things, the: (a) the transfer of property upon an individual’s death or incapacitation; (b) the designation of guardians for children; (c) the determination of who may make medical decisions for incapacitated persons; and (d) minimize any tax obligations. Please visit our previous article “When to Start Planning Your Estate” to learn more.
Benefits for Parents
Guardianship: Regardless of whether your plan centers around a Last Will and Testament or Trust, there are common benefits that each has to offer. Perhaps most importantly, parents may appoint the person that will take care of their minor or special needs child in the event of their passing. Otherwise, a judge unfamiliar with the child’s needs, as well as any unique family dynamics, will make the determination without your guidance.
Customization: A significant benefit of an estate plan is that a Last Will and Testament or Trust may specify the specific disposition of the parent’s property. Alternatively, if a properly executed estate document does not exist, the state’s laws will control what happens. This usually results in an undesired, disproportionate outcome. With a proper plan in place, provisions can set forth what should happen in any number of events. For instance, upon the death of one spouse, should all of the decedent’s assets go to the surviving spouse? Should most go to the spouse with the remainder to the child? What if the child is only 14 years old and a minor? Should funds remain in an account until the minor reaches a certain age? Who controls the account? In short, customization of your plan allows for ingenuity and the outcome you wish to have.
Asset Protection: A properly drafted estate plan, ordinarily consisting of a Revocable Trust, can provide for the protection of assets inherited by your beneficiaries. Specifically, Trusts may prevent divorce, lawsuits, and other creditor situations from acquiring the assets you earned and gave to your loved ones. Another important consideration is a child with special needs or substance abuse problems. Estate planning accounts for these circumstances and ensures that assets are responsibly managed and provided to beneficiaries for use in a manner consistent with your wishes.
There are several other advantages to estate planning. Convenience in the administration of one’s estate is another reason to create a Will or Trust. The time after a loved one’s passing is very difficult for family members. A well-drafted estate plan can prevent many of the unnecessary, time consuming, expensive and frustrating aspects of administering the decedent’s estate in court. A final positive aspect of creating a plan is the potential to minimize any state or federal tax owed upon your death, thereby allowing your beneficiaries to get the most out of what is rightfully theirs.
How to Begin
Estate planning is a nuanced area of law and it is highly recommended that you retain an experienced attorney. The attorneys at Wiley Etter, LLC provide exemplary estate and business planning services in Connecticut, New York and New Jersey. Our lawyers are available today to provide no-nonsense, custom tailored advice.