Too Young To Do Estate Planning? Parents With Young Children Need It The Most
The Fallacy Of Thinking "I'm Too Young To Need A Will"
Most young people cannot conceive that they might die in the near future. Younger people, particularly those with minor children, have as great or greater need to have a will as older folks do. Failure to take care of estate planning can cost 10's of thousands of dollars in expenses which could have been avoided.
One of the most important functions a will serves is to provide for guardians of the person (actual care and custody) and of the estate of minor children, and to set up trusts to hold and administer any assets they inherit until such age as you determine they would be old enough to manage them on their own.
If you don’t do this, and a tragedy takes both parents, a court-administered guardianship will have to be opened, and the court will determine who serves in these roles. These have been some of the most heartbreaking experiences I've been involved in my 40 years in law practice. It could so easily have been avoided.
The Con's Of A Court-Administered Guardianship
- You will have no say in which of these persons is appointed guardian of your children or their estates if you failed to make a will. It will be up to the court to pick from a list of eligible persons. Families can get into ugly contests over guardianships that divide them and destroy the family forever after.
- Meticulous yearly accountings have to be done for money and property coming in, going out, and remaining on hand, and for the well-being of the child. Court approval has to be secured before buying and selling assets. Legal expenses in meeting all these requirements can be huge. A properly drawn will with trusts for minor beneficiaries until they reach a responsible age can avoid almost all of this hassle and expense.
- Court-governed guardianship remains in effect only until the child turns 18. The assets must be distributed to the child at age 18, whether that is what you would have wanted or not. We all know that not all 18-year-olds are ready to be in charge of their own financial destiny. With a testamentary trust (one set up in your will), you can determine at what age the child receives outright distribution. You can also specify that distributions made for education are dependent on obtaining certain grades, attendance, remaining drug-free, and the like.
- The legal and accounting expenses for administering a guardianship for children for any time will likely be $10,000 or more. If the child is very young when the guardianship begins, the total can run into the $20,000-$25,000 range or more. This money will have to be paid out of the guardianship estate and the child loses the benefit of this large amount of money.
The Pro's Of A Preparing A Will To Provide For Your Minor Children
- You can specify in your will who your choices (primary and alternates) would be if that worst-case scenario happens and both parents are killed.
- You can name someone you believe is fiscally responsible as trustee for assets to be administered for your minor children. You can spell out specific guidelines for types of expenses you would approve on behalf of your children, such as private schooling, special camps or activities, and the like. The trust you set up for your minor children will be administered independent of court supervision unless someone questions the actions of the trustee. Yearly accountings are not required unless you so specify in the will.
- You can specify to what age any assets remain in trust for your children - anywhere from 18 to 65+ - whenever you think they would have enough brains to manage on their own. You also can specify distributions at various different ages or life events.
- The expense of drafting a will that includes guardianship and trust provisions for minor children is generally not more than $1,000 - $1,500. This compared to the outrageous expense of a guardianship should be compelling reason alone for parents with minor children to draft a will. Surely, most parents can budget for this reasonable expense. It will be money very well spent.
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*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)
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