When we begin a family, we think about protecting our precious angels. Some people will turn to an online estate planner website to create a basic Last Will and Testament. This Will informs the courts who you want to take care of your children if something happens to you and any other parent. We live our lives and most families do not think about their estate plan again until they become seniors. Only 46% of US adults have a viable, up to date will at the end of the day.
Let’s talk about why having an estate plan is essential.
1)Give yourself Peace of Mind: As my wife’s meditation mentor, Michael O’Brien (with Pause, Breathe and Reflect), always say ‘Take your backpack off with your rocks in it.” A well-thought-out estate plan will allow you to take weight off your shoulders. You will feel secure knowing that you have a plan in place that addresses all of life’s “what-ifs.” No reason to keep carrying a heavy backpack! The sooner you complete the task the better and the sooner you plan the better you will feel.
2) Avoid Probate: In our Q&A, we go over what probate is, but in a nutshell, probate proceedings can be expensive, public, and time-consuming. By executing a proper estate plan, either with the use of a Trust or by creatively titling your assets, you can leave your loved ones your assets in a confidential and efficient manner that avoids the courts and the probate process.
See the Question and Answer column for more details on probate.
3) Provide for special needs children: According to the Social Security office, over 4,051,000 children receive SSDI in Texas. This income is essential to ensuring that children with special needs get the help they need to support their basic needs. It would be best if you protected your children so that they do not lose these benefits. Particular care needs to be used when planning for children or grandchildren with special needs. Many planning techniques can be utilized to ensure your special needs child or grandchild receives the legacy you want to give them and still be eligible.
4) Protect children of a prior relationship: Is your family a version of the Brady Bunch or another version of a family where one or more parents came into the relationship with a child? A blended family usually has some unique dynamics. You should decide how you want to handle your assets. Do you want everything going to your new spouse or split equally among the children or do you want to protect some of your assets for your natural children after your death? Without proper planning, you may unintentionally disinherit your own children.
5) Drip your minor children’s inheritance: If you pass before your children are 18 years old, they will inherit your assets as soon as they reach their 18th birthday unless you stipulate otherwise.
If you have a house and a life insurance policy, your young adult could have a flood of money hit their bank account.
Most 18 years olds are not mature enough to handle this amount of money. It is easy to drip out the money to your children during their life or provide a co-trustee in a Testamentary Trust. If you think your child might do something with the money that they will regret, like having a big party, purchasing a really nice car, or something else extravagant and you are hoping s/he will use it for school or buy a home, you may want to create a trust. My wife received a nice gift from her great-aunt and she bought an ugly pink bathtub when we were young. She now wishes she had talked it out with someone. Without a trust in place, your child or the court will determine who will manage your child’s assets and the level of resources available to them.
6) Choose your beneficiaries: Your estate will pass according to Texas intestacy laws without a trust or will in place. By executing a Trust or Last Will and Testament, you get to determine how your assets will be distributed upon your death. Ensure your brother, who you have not spoken to in 20 years, or your father, who left your family, does not get any of your assets.
In part two of this article, we will discuss the other documents included in estate planning.