Becoming a parent for the first time is, without a doubt, one of the most joyful occasions of your entire lifetime – it is also usually one of the scariest. To realize that a tiny little human being is completely dependent on you for everything really hammers the responsibility of parenthood home. If you recently became a parent, one thing you should do shortly thereafter is to review and revise your estate plan to include your child. As a parent, you undoubtedly want to protect your minor child in your estate plan to ensure that your child is well cared for in the event something happens to you before he/she reaches adulthood. As with all estate planning decisions, it is always best to discuss your specific goals with your estate planning attorney. There are, however, some common estate planning tools and strategies that you may wish to consider when trying to protect your child in your overall estate plan.
Tools and Strategies to Consider in Your Estate Plan
- Really Use Your Last Will and Testament – you likely believe that the only purpose a Last Will and Testament has in your estate plan is to make gifts to beneficiaries of estate assets. As a parent of a minor child, however, your Will serves a more important purpose. Because your minor child cannot inherit directly from your estate, gifting assets to your child in your Will is pointless. In fact, doing that creates much problems than it resolves. Your Will, however, is the only official opportunity you have within your estate plan to nominate a Guardian for your minor children.
- Make use of a testamentary trust –most parents of minor children choose to establish a testamentary trust that is triggered by a provision in their Will in the event of their death. This allows you to indirectly gift assets to your minor children. The trust can hold your estate assets and distribute them according to the terms you create. Because you get to create the terms of the trust, you effectively retain a certain degree of control over the use of trust assets, even after you are gone. Make sure you name the right person as the Trustee though. A Trustee manages and protected the trust assets, among a variety of other duties and responsibilities. One of the biggest, and often costliest, mistakes people make is naming the wrong person to a fiduciary position, such as Trustee, without thinking about the individual’s capacity to perform those duties well.
- Don’t forget incapacity – parents always think to plan for the possibility of their untimely death; however, an incapacitating accident or illness could also create a problem for your children if no one has the legal authority to access your assets for their care and maintenance. A revocable living trust may be the solution. You have the ability to name yourself as the Trustee and naming a spouse or other trusted loved one as the successor Trustee. As long as you are capable, you will manage the trust assets; however, should you become incapacitated, the successor Trustee takes over automatically, shifting control of your assets to the person of your choosing.
- Create a limited POA for caregivers – whenever you leave your child with a caregiver, always prepare a limited power of attorney that allows the caregiver to consent to medical treatment in the event of an emergency. Hopefully, it will never be needed but if it ever is, having the authority can save valuable time.
- Life insurance can supplement your estate assets – many new parents do not accrue significant estate assets until they are farther along in their careers. To ensure that enough assets are available to provide for your child, consider supplementing the assets you do have with a hefty life insurance policy. Once you have amassed enough assets you can always drop the life insurance policy if you decide it is no longer needed.
If you have additional questions or concerns related to protecting your minor child in your estate plan, contact the experienced Massachusetts estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.