…then you need to have a Will.
Of course, everyone should have a Will, but when you have children, there are even more reasons to have a well-drafted Will. One reason is that the Will is where you name a guardian to take care of your children if you and your spouse are no longer around. Sometimes the choice of guardian is clear, sometimes it is not, but either way, it is better for the guardian to be your choice as opposed to the state making that choice for you. There is also the possibility, especially if there are two sets of engaged grandparents, that there could be a custody battle over the children. Obviously, this is to be avoided.
Another reason for having a Will is that you will want to leave your assets to your children in trust as opposed to outright. Leaving money outright to minors is never a good idea. You will want someone that you trust overseeing their money and making sure that it is used for specific purposes such as education, health and other aspects of daily life. Your trustee may be the same person that you name as guardian, but it may also be someone different. Perhaps your guardian is a loving, nurturing person but not very good with money? In that instance you may want to name a different person as trustee, someone who can better handle financial matters for your children.
Also, when does a kid stop being a kid? At age 18? Age 21? With a trust, you have control over when and under what circumstances your children receive their money. Our firm suggests keeping the money in trust for your children until they reach the age of 30. At the age of 22 we usually allow the child to receive all of the income from the trust, as well as additional money for special purposes including, but not limited to, enabling a child to establish herself in a business, for the purchase of a home, or for graduate school education. All of this can be at the discretion of the trustee. The children only receive the principal of the trust when they reach the age of 30, a more realistic age in today’s society.
Finally, once you have a good Will in place with a trust for your children, you will want to make sure that beneficiary-designated assets such as life insurance and retirement accounts are directed not to the children, but to the trust for the children. Because it can be tricky making sure that everything is properly set up, especially the retirement accounts which can only go into a trust especially set up to receive them, it is important that you have your documents drafted by a competent attorney who primarily practices in the area of Wills, Trusts and Estates. I cannot emphasize enough that it is worth the money to have your documents properly drafted to suit your particular and unique family and financial situation. It does you no good to save a little bit of money up front only to create costly problems down the line.
Contact me if you have any questions about setting up a Will with a trust for your children.
The contents of this post is offered for informational purposes only and should not be construed as legal advice. A visit to this website does not create an attorney-client relationship. You should consult with an attorney for individual advice regarding your individual situation.