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Estate Planning for Minor Children
BELLOMO & ASSOCIATES, LLC
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ESTATE PLANNING FOR MINOR CHILDREN
Estate plans are for people of all ages. Often, young couples do not see the value of an estate plan because they have not yet accumulated a large amount of assets. However, when there are minor children, an estate plan can be vital to caring for them in the event of a tragedy.
Though most young couples do not have a large pool of assets, many do have life insurance policies. A life insurance policy can pass to a designated beneficiary without going through the probate process. However, life insurance companies will not generally distribute proceeds to a minor. An individual will have to go to court and set up a guardianship for the minor, which cannot be done without hiring an attorney.
ESTABLISHING A LIVING TRUST
Once the guardianship is set up, there are reports that must be filed every year and the court may monitor the funds or even require a court order to access them. This results in ongoing court costs and attorney fees. The funds that are left when the minor reaches eighteen (18) years of age are then distributed outright to the minor with no instructions or control.
This can be avoided by establishing a living trust or properly setting up a testamentary trust in your will. You can name a trust as a beneficiary to the life insurance policy. In the trust you can name a trustee to manage the funds and give them instructions as to how you want the funds used. The trustee then can use the funds to care for the minor child according to your wishes with no court intervention. You determine the age at which you want the child to receive the funds outright or the funds can stay in the trust and be used for things like graduation, college, or her or his wedding.
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FOR ESTATE PLANNING FOR MINOR CHILDREN