Preparing your estate plan inevitably requires that you consider your own mortality. If you have children under the age of 18, planning to provide for and protect your family is even more important. But can a minor be a beneficiary at all? One of the first questions you should ask is: who will care for your children if you have passed away or are incapacitated? A second and closely related question is: what kind of financial protections can you put in place to provide for your family when you are gone? If you have children with special needs who will require assistance into adulthood, there are additional questions you must consider.
Ann Arbor attorney Bill Ager has extensive experience helping clients answer these questions. He will guide you through the estate planning process and help you plan for the future, all for a flat, reasonable fee.
If you have minor children, you will want to name a guardian in your will. You will also want to ensure that your children are provided for financially if you pass away before your children reach adulthood.
For married people whose spouse is also the legal parent of your children, it is logical to have your spouse care for the children if you die or become incapacitated. Nevertheless, a married couple should name a successor guardian for their minor children in each of their wills in the event that both die or become incapacitated and their children are still minors.
If you are divorced, are a single parent, or if your children’s other parent is unable to care for your children, it is important that you appoint a guardian for your minor children in your will.
You will also want to provide financial support to your children in the event of your death or incapacity. Life insurance policies are commonly used to replace income that would have supported your children until adulthood. A life insurance policy can also help pay for the cost of college tuition and other expenses as your children transition into adulthood.
You may also consider purchasing long-term care insurance to prevent your assets from being depleted by the cost of caring for you if you need to be placed in a nursing home or other long-term care facility.
You may consider designating your minor children as beneficiaries on life insurance policies, bank accounts, retirement accounts, or other investment accounts. However, by doing this, your minor children could receive large sums of money at a very young age. If a surviving parent or another adult wanted to prevent the children from access to the funds, they would need to petition the probate court to have a conservator appointed to place the assets in a restricted bank account. Even then, the assets would earn a very low interest rate.
When child beneficiaries are concerned, it is wise to create a trust to preserve assets. These funds can then be used to provide for your children in the future.
Creating a trust will provide additional financial protection for minor children who are beneficiaries. A trust will ensure that your children have access to financial assets but will still provide important limitations on how much a minor beneficiary can receive and how those assets can be used.
Many parents are rightfully concerned about allowing their children to inherit large sums of money or other assets at a very young age. A trust can be used to hold and protect money and other assets until the child is mature enough to decide how to handle them. You can also use a trust to give a child smaller amounts of money at a time and have a trustee exercise control over the type of expenditures for which trust assets can be used. A trust can also protect assets from creditors if a child ever experiences problems with substance abuse or reckless spending.
Using a trust also allows you to communicate how you want the money you leave to your children to be managed, when trust assets will be distributed, and when trust assets should be withheld.
If you have children with special needs who may be unable to care for themselves as adults, a trust can ensure that they have the financial resources necessary to pay for the care they will need in the future. Creating a trust early will give you the peace of mind that your child will be protected financially even after your passing.
If you are ready to take the next step to preserve your legacy and protect your loved ones, contact Michigan estate planning attorney Bill Ager today.
Bill will work with you to help you identify and achieve your estate planning goals. He will develop a personalized estate plan that will meet your needs, protect your legacy, and ensure that your wishes are carried out.
Contact Bill Ager today to schedule a confidential consultation to discuss your estate planning needs and learn how Bill can help.