Estate Planning for Young Families

Friday, November 10, 2017

young-familyPeople in their 20s and 30s with young children tend to think it is not necessary to have estate planning documents in place because they do not have a great number of assets to pass along to their children. However, this reasoning is flawed for two main reasons:

 

  1. Estate planning documents are designed to designate who will care for their children’s well-being, as well as their financial needs.
  2. Many young families have life insurance policies at death, making the young mom and dad’s estates substantially wealthy at their deaths.

If young parents die without estate planning documents, their children will inherit a large sum of money. This money will be funneled through Probate Court and be supervised by the Court through the appointment of a guardian. One or multiple family members may apply to the Probate Court for a guardianship over the children and use that money under court supervision to care for the children. At age 18, each child will immediately be entitled to his or her share of inheritance, potentially being hundreds of thousands of dollars.

Proper planning allows families to avoid squabbles over who should be the guardian of the children. Further, a trust allows parents to take care of future financial needs of their children. Through a trust, parents are able to designate who they want as trustee, or the manager of a property. A trust will also allow the parents to set parameters regarding when their children may receive his or her inheritance. Whether the trust is overseen by Probate Court or outside of Probate Court depends on each family’s situation. However, having court oversight may be in the family’s best interest, which ensures the trust property is being properly used for the benefit of the children.

- Posted by Attorney Ethan Welch

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